A British judge has ruled that the actor must pay the hefty tax bill after incorrectly classifying his residuals as a capital asset instead of income
Rupert Grint is facing a hefty tax bill after losing his case against British tax authorities, who alleged that the actor utilized a financial loophole previously used by The Beatles to try and lower his tax payments.
A British judge has ruled that the Harry Potter alum, 36, must pay £1.8 million (about $2.3 million) to His Majesty’s Revenue and Customs (HMRC), the U.K.’s tax agency, after improperly classifying his residual payments from the film series as a capital asset instead of income, the Associated Press reported.
According to the outlet, HMRC began investigating Grint’s 2012 tax return in 2019, and alleged at the time that the actor had wrongly classified £4.5 million in income from Harry Potter DVD sales, TV syndication, streaming rights and other sources in an attempt to pay a lower tax rate. Income is subject to a much higher tax rate than capital assets in the U.K.
The Telegraph reported that Grint formed the company Clay 10 Limited in 2011 and sold his residual rights to the company as capital. A filing obtained by the outlet shows that the company had more than £27 million (or about $34 million) in equity in March 2023.
Lawyers for Grint appealed at the time when the investigation first began, the AP reported, but just this week, a tribunal judge ruled in favor of HMRC and ordered Grint to pay the taxes he owed.
Throughout the case, HMRC cited the “Beatles clause,” likening the tax loophole to a strategy The Beatles tried to use in the 1960s when they formed a company and sold the rights to their music to it to pay capital gains tax instead of income tax, Entertainment Weekly reported.
Per the AP, U.K. Judge Harriet Morgan said in the ruling that Grint’s residual money “derived substantially the whole of its value from the activities of Mr. Grint” and “is taxable as income.”
Morgan also agreed with Grint’s claims that he had left most of his financial matters for his dad Nigel and accountants to handle, and did not know the extent of what had occurred.
Grint “placed his faith in his father and accountants to deal with his financial affairs,” Morgan said, per The Telegraph.
The actor appeared in all eight Harry Potter movies from 2001 to 2011 as Ron Weasley. The AP reported that he is estimated to have made around £24 million ($30 million) for starring in the franchise.
Since the series ended with the second installment of Deathly Hallows, Grint has appeared in a number of film and TV projects, including M. Night Shyamalan’s Knock at the Cabin and Servant, as well as Guillermo del Toro’s Cabinet of Curiosities and 2015’s Moonwalkers.
According to AP, this isn’t the first tax case that Grint has lost to the U.K. government. He also lost a separate court battle over a £1 million tax refund in 2019.
