The Foreign Office said Thursday that the move means Britain formally asserts that Iran has failed to meet its international obligations in its treatment of Nazanin Zaghari-Ratcliffe.
Foreign Secretary Jeremy Hunt said legal proceedings against her in Iran were deficient and that she has been denied proper access to medical care.
"My decision is an important diplomatic step which signals to Tehran that its behavior is totally wrong," he said.
Hunt conceded the move is unlikely to lead to immediate results. The British government has long been seeking her release.
Zaghari-Ratcliffe was arrested in April 2016 on charges of plotting against the Iranian government. Her family denies the allegations.