According to Iranian state TV, the UK Government will pay a £400million debt to Tehran.
By doing this, it will help pave the way to release Ms Zaghari-Ratcliffe.
The UK Government has not confirmed this prisoner exchange despite reports from Iranian state media.
The £400 million fee is in relation to a debt over the non-delivery of tanks dating back to the 1970s.
It is thought the US has also agreed to release £5billion of frozen Iranian funds in order to sanction the prisoner swap.
Despite the reports, a UK Foreign Office spokesperson claimed the 40-year debt dispute is ongoing and is not yet resolved.
They said: “We continue to explore options to resolve this 40-year-old case and will not comment further as legal discussions are ongoing.”
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