Britain ends exemption for payments to Iranian entities as licence expires on 22 October

Key Facts

A British general licence allowing specified payments to Iranian entities exempted from sanctions expired on 22 October 2026 after the Treasury announced it would not renew it. The measure covers authorisation for payments including obligations to employees and directors and service costs related to operations within the United Kingdom. The Treasury said in its guidance that the general licence "will not be renewed upon expiry", ending the authorisation period for settling obligations within its scope. The Office of Financial Sanctions Implementation had previously extended the licence for 6 months, setting its expiry in October. The expiry followed the publication of guidance tightening licensing policy on 23 September 2026, aligning the end of the general exemption with stricter treatment of applications from the Iranian banks concerned.

Payments covered by the licence extended to wages and allowances due to eligible employees and directors in the United Kingdom, according to its text published by the Office of Financial Sanctions Implementation. It also allowed severance payments, whether due under contracts or by law, as part of payments relating to eligible staff. The authorisation covered pensions for eligible employees and directors, alongside obligations related to wages and termination of employment, bringing multiple types of staff entitlements within its scope. For operational services, the licence covered information technology service costs, as well as fees and other costs associated with statutory or certified accounting services relating to operations within the United Kingdom, according to a notice it published. The annex listing covered entities included Iran Insurance Company alongside the banking entities named in it, extending the payment exemption to an insurer as well.

Under the tightened licensing policy, the Office of Financial Sanctions Implementation applies what Treasury guidance describes as a "presumption of refusal" when considering applications from the Iranian banks specified in it. The list of banks subject to the policy includes Bank Sepah, Melli Bank Plc, Bank Saderat, Persia International Bank and Bank Tejarat. The office assesses each application individually, applying this presumption when considering whether to grant the authorisation requested by the banks covered. The guidance explicitly restricts the repatriation to Iran of funds held by entities operating in the United Kingdom, stating that licences will not be issued for this purpose. This includes direct and indirect transfers, according to the Treasury, making the policy applicable to repatriation through either route.

The exemption's expiry comes amid broader amendments to British sanctions relating to Iran and nuclear sanctions that took effect on 29 September 2026, according to Britain's Department for Business and Trade. The new financial restrictions include bans on loans, credit and investment, expanding the range of financial activities subject to sanctions measures. They also include restrictions on banking relationships and market access, alongside a ban on insurance and restrictions on dealing in Iranian sovereign bonds, according to the department's notice to exporters. As part of the reimposition of United Nations sanctions, Britain's Foreign Office announced the reinstatement of 121 designations targeting those involved in Iran's nuclear and ballistic missile programmes. Britain had imposed sanctions on 71 individuals and entities in an earlier round linked to Iran's nuclear programme. That round included Iranian financial institutions and energy companies, according to a Foreign Office statement, as part of measures preceding the expiry of the general payments licence.

All open licence applications, including those awaiting a decision, are subject to the tightened policy, according to clarifications from the Office of Financial Sanctions Implementation on how the guidance applies. The office said the policy "will apply to all open applications", including applications still under consideration. Approvals for the banks covered are limited to cases required by law or "exceptional and urgent circumstances", according to frequently asked questions published by the office. These circumstances include risks to life, physical safety or environmental safety, which the office cited in explaining the scope of possible exceptions to the refusal policy. Activities it may consider licensing also include steps to wind down operations, including insolvency proceedings, among the applications it assesses under the tightened policy.