Elena18 wrote:If i want to pass on BTC under my gift allowance, how do i do that in practicality? and even more so if i have a child under 18 that doesnt have the right to open an account?
what are the options? state it in my taxes at the end of the year but keep in my possession in the mean time? move it to a ledger? print a paper wallet? how / where do i report it?
haven't done a gift before.
Well specifically, nobody needs an account to own bitcoin. The point it that its peer to peer. Indeed from one point of view it ONLY exists on the bitcoin ledger, known as the block chain.
Hence children of any age can be given and own bitcoin. They can earn bitcoin, sell bitcoin, buy with bitcoin etc, subject to employment and transaction law. I have bought beer with bitcoin, but they couldn't, because it's beer.
In terms of tax you should definitely make a record of the gift. Both the amount of bitcoin they receive and the value in £'s of that bitcoin. However you are doing it for the child's benefit. They will/may at some point in the future be responsible for any capital gains.
I recommend investigating IHT as your estate may need to pay tax upon gifts if they are recent or large i.e
https://www.which.co.uk/money/tax/inher ... uj06V0vxaXI would recommend keeping such information about the gift in a place that your executor can find the details. Not just as a PET, but for the benefit of the recipient if they become reliant upon you for such info. Currently IHT and CGT are the only taxes to be concerned about.
I have never given any bitcoin to my children, but did involve them in junior ISA's. I helped them chose investments, but actually made them chose. I then helped them buy, well officially instructed them to buy their investments. Legally they could not do so themselves but could do so under my instructions. I encouraged them to check the performance of their investments and discussed other investments with them. The law is an ASS, legally preventing young adults from learning to act as adults.
I would STRONGLY advise considering the education that this child may need to interact with bitcoin. There is a bitcoin concept called "Uncle Jim" where said family member acts as the font of knowledge and even custody. But what happens when they die? How can other family members buy or sell using bitcoin if it is held for them?
I see some long talks between you and said child.
Ok, paper wallets. I regard them as something to avoid. However my idea is not that much different. You need some bitcoin, which means that you likely need an account with an exchange. The child needs some form of wallet. There are many good mobile phone wallets, ensure that the one that you pick one that is BIP39 compliant, most are. BIP39 wallets have a seed phrase and if you enter that seed phrase into a different wallet it will contain and trade as the first wallet. Now stamp the phrase IN ORDER on a lump of metal. You can transfer bitcoin to that wallet, then delete the wallet. Note that I'm assuming that the child never ran wallet software. Or you can purchase a hardware wallet and keep the hardware.
The child can recover the bitcoin at a later date using the seed phrase. You can use an new wallet for future gifts, created with the same seed phrase.
At some point you will need to discuss security. I doubt that we are talking lunch money amounts.
The contents of hardware wallets can be viewed without access to the hardware. You only need the hardware to sync the viewing software to the wallet or to transact. I believe that there are view only wallet apps that just need the seed phrase, but chose carefully.
Hope this helps.