:max_bytes(150000):strip_icc()/GettyImages-1459411245-8ecd453a20ec4a7986d85a4a87dd2314.jpg?w=1500&resize=1500,1000&ssl=1 "What Ron Weasley Could Teach Us About Capital Gains Taxes—And What He Got Wrong | Global News Avenue")
What Ron Weasley Could Teach Us About Capital Gains Taxes—And What He Got Wrong
:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-1459411245-8ecd453a20ec4a7986d85a4a87dd2314.jpg)
The rules for capital gains tax versus ordinary income tax are complicated enough to make anyone make a mistake. Just ask Rupert Grint.
HMRC UK tax authorities (HMRC) issued Grint a $2.3 million (£1.8 million) tax bill in 2019 after investigating his tax returns from seven years ago. Grint lost his appeal in late 2024.
Grint played Ron Weasley in the Harry Potter films from 2001 to 2011. The films reportedly paid him around £24 million (approximately $30 million) over the decade. According to HMRC, £4.5 million of his income related to Harry Potter was wrongly classified as a capital asset rather than ordinary income.
To avoid making tax mistakes yourself, whether you live in the UK or the US, make sure you understand the rules for capital gains tax
Main points
- Rupert Grint, also known as Ron Weasley, has been ordered to pay $2.3 million in back taxes until the end of 2024 after losing an appeal to the UK tax authorities over a misclassification of his income.
- In the US and UK, long-term capital gains are taxed at much lower rates than ordinary income.
- Capital gains result from an increase in the value of an asset. Ordinary income is essentially generated by performance and labor.
What did Rupert Grimes do wrong?
Following an investigation, HMRC successfully argued that Grint misclassified some Harry Potter-related income from film residuals (approximately $5.7 million) as capital gains income, which is taxed at a lower rate. Revenue reportedly comes from television, streaming, DVD sales and more. The tribunal judge agreed with HMRC and ordered Grint to pay in 2024.
Grint was not the mastermind behind the tax move. He was still a minor when the Harry Potter films were filmed. His fund is managed by his father, Nigel Grint, according to Newsweek. Clay 10 Limited was established as a company to receive this income. Rupert Grint was appointed sole shareholder. His father remained a director of the company until his death.
Rupert Grint’s Clay 10 Limited revenue split between film contracts (ordinary income) and “goodwill, records and rights” (capital gains income) on the company’s 2011-12 tax return.
HMRC considers that the latter is not capital gains but ordinary income.
How capital gains tax works
one capital gains tax A levy on the increase in a property’s value during ownership. Gains are measured from the time the asset is purchased to the time it is sold. Subtract its value at the time of purchase from the sales price and pay capital gains tax on the balance.
Capital losses may also occur and, in certain circumstances, may be tax-deductible.
Capital gains tax rates in the United States depend on how long you have owned the asset. If you hold the asset for a year or less, this is a short-term gain. These gains are taxed on your income along with your ordinary income tax bracket. one long term returns This happens if you hold the asset for more than a year. These gains are taxed at a lower rate based on your total taxable income. As of 2024, the rates are 0%, 15% and 20% respectively, with a few exceptions.
Compare this to ordinary income tax rates, and you can see why someone would want to classify ordinary income as capital gains. Depending on your highest income, the ordinary income tax rate can be up to 37% as of 2025.
UK and US capital gains
The UK capital gains tax that Grint is addressing is set up in much the same way as the US capital gains tax. Proceeds are calculated the same way: subtract the price you paid for it from the price you sold it for. The balance is subject to capital gains tax. The UK provides a tax-free allowance of £3,000 (£1,500 for trusts). You only pay capital gains tax on gains above this amount.
Grint reportedly paid the taxes associated with his investigative filings at a top ordinary income tax rate of 50% and a top capital gains tax rate of 28% at the time, while an entrepreneur relief provision reduced his tax rate to 10% for the first 10 years. million pounds.
Most people use automated calculation software to determine their tax liability (or have a professional do it for them). You can use a capital gains calculator to get a rough idea of what you might pay on a potential or actual sale.
U.S. capital gains tax rates in 2025
| long term capital gains | |||
|---|---|---|---|
| Filing status | 0% | 15% | 20% |
| single | Up to $48,350 | US$48,350 to US$533,400 | Over $533,400 |
| Head of household | Up to $64,750 | $64750 to $566,700 | Over $566,700 |
| Married filing jointly or surviving spouse | Up to $96,700 | $96,700 to $600,050 | Over $600,050 |
| Married filing taxes separately | Up to $48,350 | $48,350 to $300,000 | Over $300,000 |
How to protect yourself
Even if you’re not a Harry Potter star or a famous actor, whether you file taxes in the US or UK, you want to correctly classify your income when it comes time to do your taxes. The first step in protecting yourself from misclassification of ordinary income as capital gains is to understand the basic rules.
Revenue comes from tax benefits Retirement account, such as traditional (non-Roth) Individual Retirement Account (IRA) and traditional (non-Russian) 401(k)s Are ordinary income in the United States, although you don’t pay taxes on the earnings until you withdraw the funds. Your contributions lower your taxable income, thus reducing your tax bill.
Proceeds from the sale of assets, e.g. securities or real estate is usually a capital gain. In the United States, there are exceptions for collectibles and owner-occupied real estate, so if you have any questions about how to classify your income, it’s best to consult a tax expert.
bottom line
How capital gains compare to ordinary income depends on the source of the income in question. This can be a complicated distinction. The safest bet is to consult a tax advisor or hire a professional Prepare your tax return This way you can get it right and not end up in Rupert Grint trouble.
:max_bytes(150000):strip_icc()/GettyImages-1459411245-8ecd453a20ec4a7986d85a4a87dd2314.jpg?w=1200&resize=1200,0&ssl=1&description=What+Ron+Weasley+Could+Teach+Us+About+Capital+Gains+Taxes%E2%80%94And+What+He+Got+Wrong+%7C+Global+News+Avenue){kind=link}