The reopening of Britain's embassy in Iran is an "important milestone" in the diplomatic thaw between London and Tehran, the Foreign Secretary has said.
Philip Hammond claimed the move would build trust between the two nations and insisted there should be "no limit" to what could be achieved in the future.
Britain has had no diplomatic presence in Tehran since 2011 when a mob rampaged through the embassy compound smashing windows, torching cars and burning Union flags.
Some damage remains visible, with graffiti above a portrait of the queen declaring "Death to the English", according to the BBC.
The Foreign Office said Britain was "in discussions with Iran about compensation for the damage" to the compound in Tehran.
Mr Hammond said the attack was a "low point" in relations but the election of Hassan Rouhani as president has seen links improve "step by step".
The reopening ceremony, where the Union flag was raised to the sound of the national anthem, is an "important milestone in improved relations", according to Mr Hammond.
Plans to reopen the embassy were announced by the Government last year as relations between London and Tehran improved under president Rouhani and Iran's strategic position came under the international spotlight as the crisis sparked by Islamic State grew in neighbouring Iraq.
Last month Iran struck a deal after a decade of negotiations with world powers over its nuclear programme, with some sanctions being lifted in return for allowing inspections.
The easing of sanctions will open up significant international trade opportunities.