The asset freezes will apply against Sberbank — Russia’s largest bank — in coordination with the United States’ sanctions, and the Credit Bank of Moscow.
The latest round of sanctions comes in response to the scenes of atrocities that were revealed when Russian forces left the town of Bucha, northwest of the capital, Kyiv, last week.
In what the Foreign Office described as a “major hit” to the Russian economy, the government will also introduce an “outright ban” on outward investment to the country, worth £11 billion in 2020.
It also confirmed earlier plans to end all imports of Russian coal and oil by the end of 2022, with the end of gas imports “as soon as possible thereafter”.
Imports of Russian iron and steel products will be banned and a further eight oligarchs have also been added to the sanctions list.
Liz Truss, the foreign secretary, said: “Today, we are stepping up our campaign to bring Putin’s appalling war to an end with some of our toughest sanctions yet,” she said.
“Our latest wave of measures will bring an end to the UK’s imports of Russian energy and sanction yet more individuals and businesses, decimating Putin’s war machine.
“Together with our allies, we are showing the Russian elite that they cannot wash their hands of the atrocities committed on Putin’s orders. We will not rest until Ukraine prevails.”
The oligarchs facing sanctions are leading business people in strategic industries including fertilizer companies, gas and oil firms, and the world’s largest diamond producer, Alrosa.
One, Andrey Guryev, the founder of the fertilizer firm PhosAgro, is described as a “known close associate of Vladimir Putin”.
A second, Boris Borisovich Rotenberg, is the son of the co-owner of Russia’s largest gas pipeline producer SGM.
The Foreign Office said the Rotenberg family “are known for their close connections to Putin and a number of them have already been sanctioned”.
The crackdowns come as the UK and leading EU nations attempt to reach agreement on stepping up the targeting of Moscow’s lucrative gas exports, at a G7 meeting on Thursday.
Ms Truss has said sanctions must include “agreeing a clear timetable to eliminate imports of Russian oil, coal and gas”, after weeks of EU indecision.
On Tuesday, the EU announced a ban on imports of coal, wood, cement, liquors and seafood – and said it would consider an embargo on oil – but made no mention of gas.
While the EU’s coal imports are worth an annual €4bn to Russia, that is dwarfed by the €100bn paid to Russia by EU countries last year for its oil and gas.
Josep Borrell, the EU’s Spanish foreign affairs chief, called for action on oil, saying: “Each day, roughly, we are paying €1bn to import Russian energy, and that’s, obviously, a source of income that’s used to finance the war.”