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Al Rayan Bank and capital gains.
arsenalboy
Posts: 457 Forumite
With interest rates remaining low I always find it difficult to find a home for money having exhausted all regular savers and current accounts. My new £1000/500 tax free interest is spoken for.
I see that Al Rayan Bank is paying a "return" of 2.78% for a 2 year bond.
To comply with Islamic rules they cannot pay interest and instead pay profit. This is not guaranteed but they have never defaulted.
This being the case they are not paying interest. Therefore, can this be treated as an investment. The profit could be treated as a gain on the investment and put against capital gain allowance and the return becomes tax free.
This is all written tongue in cheek of course but is an interesting thought!
I see that Al Rayan Bank is paying a "return" of 2.78% for a 2 year bond.
To comply with Islamic rules they cannot pay interest and instead pay profit. This is not guaranteed but they have never defaulted.
This being the case they are not paying interest. Therefore, can this be treated as an investment. The profit could be treated as a gain on the investment and put against capital gain allowance and the return becomes tax free.
This is all written tongue in cheek of course but is an interesting thought!
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Comments
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arsenalboy wrote: »With interest rates remaining low I always find it difficult to find a home for money having exhausted all regular savers and current accounts. My new £1000/500 tax free interest is spoken for.
I see that Al Rayan Bank is paying a "return" of 2.78% for a 2 year bond.
To comply with Islamic rules they cannot pay interest and instead pay profit. This is not guaranteed but they have never defaulted.
This being the case they are not paying interest. Therefore, can this be treated as an investment. The profit could be treated as a gain on the investment and put against capital gain allowance and the return becomes tax free.
This is all written tongue in cheek of course but is an interesting thought!
No, HMRC recently declared the "expected profit" to be considered as "interest" for tax purposes, in light of the imminent £1000 tax allowance.
An HMRC spokesman said "Where returns are the economic equivalent of interest (and meet certain other criteria) they are taxed as if they are interest - and will be included within the definition of savings income."
You can read about it here.
I've enjoyed my money with Al Rayan (IBB before it), the amount paid has always been as "expected".0 -
In any case, investment income cannot be "put against capital gain allowance".0
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