Rupert Grint Hit With $2.3 Million Tax Bill Over Harry Potter Residuals

A British court has ruled against Rupert Grint in a tax dispute with His Majesty's Revenue and Customs (HMRC), causing him to suffer a major financial blow. After incorrectly classifying his residual earnings from the ‘Harry Potter’ films as capital assets rather than income, the actor, who is best known for playing Ron Weasley in the series, was sentenced to pay £1.8 million (about $2.3 million) in taxes. The money would have been taxed at a lower rate under this categorisation.

HMRC started investigating the case in 2019 after discovering a 2012 tax return. The agency asserted that Grint misclassified £4.5 million in revenue from the sale of ‘Harry Potter’ DVDs, syndication, streaming, and associated sources to reduce his tax liabilities. This is an alluring but incorrect tax-cutting tactic since income is taxed more heavily in the UK than capital gains.

Image Courtesy: People

According to reports, Grint founded Clay 10 Limited in 2011 in order to sell his remaining rights as capital assets. The company's equity was above £27 million ($34 million) as of March 2023. However, the tribunal judge decided that Grint's residuals should be taxed as income because they were primarily related to his own work. This ruling is consistent with the so-called "Beatles clause," which refers to a tax loophole that the iconic band tried to take advantage of in the 1960s by selling the rights to its songs to a business that they owned.

Grint's claim that he left his financial affairs to his father and accountants, who made the decisions, was accepted by the court. Even though Grint was not directly involved in the financial arrangements, Judge Harriet Morgan pointed out that his gains were nonetheless classified as a tax burden.

Image Courtesy: MCE TV - Ouest-France

Grint has now explored other parts of television and movies. Between 2001 and 2011, he earned an estimated £24 million ($30 million) from his participation in all eight ‘Harry Potter’ films. Notable works include ‘Cabinet of Curiosities’ by Guillermo del Toro, the television series ‘Servant’, and ‘Knock at the Cabin’ by M. Night Shyamalan. Grint has already lost a case in 2019 regarding a £1 million tax refund dispute, so this is not his first tax-related court problem.

–Farheen Ali