What Is Embezzlement? UK Law, Sentences and Defences

Embezzlement means dishonestly taking money or property that a person was trusted to look after, usually on behalf of an employer, a client, or an organisation. Prosecutors in England and Wales charge the conduct as theft under section 1 of the Theft Act 1968 (maximum 7 years in prison, set by section 7), fraud by abuse of position under section 4 of the Fraud Act 2006 (maximum 10 years), or false accounting under section 17 of the Theft Act 1968 (maximum 7 years).

The label sounds Victorian. The allegations rarely do. A payroll entry that looks slightly odd, a company card swiped once too often, a ledger that refuses to balance - these small details are how most cases begin.

Readers arrive here for two reasons: a definition or an accusation. Both get answers below.

What Does Embezzlement Mean in Plain English?

Think of embezzlement as a betrayal of access. A person receives lawful control over money or property, then uses it for their own benefit.

Trust sits at the centre of the idea. A stranger who breaks into a till is a thief. A bookkeeper who quietly redirects the takings has used a position the business handed over willingly, and courts take that breach seriously.

Search engines hear "what is embezzlement" and "what is an embezzlement" every day, and the word forms cause most of the confusion. The verb embezzle means to take money or property that was placed in your care.

The meaning of embezzled is the same as the act in the past tense. Spot a news report saying funds were embezzled, and the phrase embezzled means the taking has already happened. The meaning of embezzling covers the act while it continues, such as a person embezzling small sums each month so the gaps escape notice.

Three short examples show the pattern:

• An employee diverting customer payments into a personal account
• A club treasurer covering personal costs from club funds
• A company director paying household bills from company accounts

How the Law in England and Wales Treats Embezzlement

Embezzlement is a crime, although the statute book uses other names for it. Parliament folded the old label into broader offences, and prosecutors now choose from three main charges:

• Theft (section 1, Theft Act 1968): dishonestly taking property that belongs to another person, intending to keep it for good. Maximum sentence: 7 years in prison (section 7).
• Fraud by abuse of position (section 4, Fraud Act 2006): dishonestly misusing a role in which you are expected to protect another person's finances, intending to gain or cause a loss. Maximum sentence: 10 years in prison.
• False accounting (section 17, Theft Act 1968): falsifying, hiding, or destroying accounting records to make a gain or cause a loss. Maximum sentence: 7 years in prison.

All three are either-way offences, which means a case may be heard in the Magistrates' Court or the Crown Court. The Crown Prosecution Service (CPS) publishes its charging approach in its guidance on the Fraud Act 2006.

Scotland keeps embezzlement as a separate common law crime, meaning an offence shaped by court decisions rather than an Act of Parliament.

Embezzlement, Theft, and Fraud Compared

The three charges overlap, so a side-by-side view helps.

Prosecutors may bring more than one charge from the same facts. Embezzlement describes what happened; the charge describes how the law labels it.

Everyday Ways Embezzlement Shows Up at Work

Workplace cases tend to follow familiar routes:

• Payroll "ghost" employees, meaning invented staff whose wages land in an account the sender controls
• Fake expense claims backed by made-up receipts
• Skimming of cash takings, where part of the day's money is kept back before banking
• Bank transfers from business accounts to personal accounts
• Misuse of a company card for personal spending
• Misuse of client money by professionals such as accountants, solicitors, or estate agents

The sums range from a few hundred pounds to seven figures. The legal questions stay the same: was the money entrusted to the person, and was the taking dishonest? Our guidance on theft allegations explains how those questions play out in practice.

How an Embezzlement Investigation Unfolds

Most cases start inside the workplace. An employer spots a discrepancy, suspends the person involved, and opens an internal investigation, often with forensic accountants (specialists who trace money through company records) examining the books.

A report to the police or to the national fraud reporting centre run by the City of London Police usually follows. The police may invite you to a voluntary interview or arrest you first. Either route leads to an interview under caution, a recorded interview in which your answers can be used as evidence in court.

Officers often request bank records, emails, and devices. Our police interview advice page describes how representation works at that stage.

The employer may also bring a civil claim to recover the money, sometimes alongside a freezing injunction, a court order that restricts a person from spending or moving assets. Civil and criminal cases can run side by side.

What Sentence Can Embezzlement Carry?

Sentences depend on the charge, the sum involved, and the level of trust that was breached. Courts follow the Sentencing Council's guidelines for fraud offences and theft offences.

Two questions drive the outcome. Culpability measures how much blame the conduct carries, and harm measures the loss caused. Abusing a position of trust usually places a case in the higher culpability bracket, and the amount taken sets the harm level.

A guilty plea entered early can reduce a sentence under a separate Sentencing Council guideline, which is one reason early advice matters.

A prison term is only one consequence. Others include:

• Compensation orders, which require repayment to the victim
• Confiscation under the Proceeds of Crime Act 2002, which aims to recover the financial benefit of the offending
• Director disqualification under the Company Directors Disqualification Act 1986
• Loss of professional registration in fields such as accountancy, law, or financial services

Our pages on confiscation and asset restraint and directors' personal liability cover the money side in more detail.

Defending an Embezzlement Allegation

Dishonesty is the element prosecutors must prove in each of these charges. The test comes from Ivey v Genting Casinos [2017] UKSC 67: the court first asks what the person genuinely believed at the time, then asks whether ordinary decent people would see that conduct as dishonest.

Other lines of defence depend on the facts:

• Authorisation: the payment was approved or agreed
• Genuine belief: a sincere view that the person had a right to the money, such as an owed bonus or loan
• Accounting errors: a mistake that explains the shortfall
• Shared access: several people could reach the cash or the account
• Evidence gaps: material that falls short of proving each element to the criminal standard

A solicitor who reviews the documents can tell you which of these, if any, fit your situation.

First Steps After an Embezzlement Accusation

Critical decisions arrive early, often within days of a suspension or a call from the police. Four steps protect your position:

• Request legal advice before offering any explanation to your employer or the police.
• Preserve every record, message, and device as it stands.
• Keep copies of anything that shows authorisation, such as emails, approvals, or policy documents.
• Record dates, names, and what was said at each meeting.

Early advice can shape both the internal investigation and the police interview. Pre-charge representation covers the period between an allegation and any decision to charge, including preparation for a police interview.

Holborn Adams is privately funded and works on fixed fees. Call our 24/7 line on 020 3870 2249 to speak with a solicitor about your situation. Our fraud solicitors and serious fraud solicitors advise on allegations at every stage.

This article is for general legal information only and does not constitute legal advice. For confidential advice about embezzlement allegations, contact Holborn Adams to speak with an experienced solicitor.

Frequently Asked Questions

Is embezzlement a criminal offence in the UK?

Yes. England and Wales prosecute the conduct as theft under the Theft Act 1968, fraud by abuse of position under the Fraud Act 2006, or false accounting under the Theft Act 1968. Scotland treats embezzlement as a separate common law crime.

Can you go to prison for embezzling from your employer?

Yes. Theft carries a maximum of 7 years, false accounting carries a maximum of 7 years, and fraud by abuse of position carries a maximum of 10 years. The sum taken and the breach of trust shape the sentence, and a court may impose other outcomes depending on the facts.

What is the difference between embezzlement and fraud?

Embezzlement is one type of fraud where the money was entrusted to you. Fraud is the wider category, covering false statements, hidden information, and abuse of position. The charge in a given case depends on how the conduct fits the wording of each offence.

Can my employer sue me as well as report me to the police?

Yes. Civil and criminal cases can run at the same time. An employer may seek repayment through the civil courts, sometimes with a freezing injunction, while the police pursue a separate investigation. Take legal advice before responding to either.

Will charges be dropped after I repay the money?

Repayment can influence a charging decision and may reduce a sentence, although the prosecution can proceed regardless. Repayment is a mitigating step rather than a defence. Take legal advice before offering any repayment, since an offer can be read as an admission.

How far back can embezzlement be investigated?

Theft, fraud by abuse of position, and false accounting are either-way offences, and prosecutors may bring them at any point after the event. An investigation can therefore reach back many years.