Sephora interest

swissroll

The banks that do interest under sephora law where interest is ilegal. How can they do it? Must we pay tax on it? 

Mark_d

Yes you have to pay tax on all income - subject to personal allowances

Ayr_Rage

swissroll said:

The banks that do interest under sephora law where interest is ilegal. How can they do it? Must we pay tax on it? 

If you mean Sharia Law, then the profit paid is treated the same as interest as far as HMRC is concerned and may be taxable depending on your personal circumstances. 

swissroll

Yes ok thank you. 

DullGreyGuy

Shari’ah-compliant banking is broadly a fudge, with a murabaha mortgage the bank buys the house and sells it to you at a profit and allows you to pay it off in instalments, oddly enough the "profit" is remarkably aligned to interest rates on long term borrowing and the instalments very similar to what a traditional mortgage would be. 

There have been amendments to UK tax rules to manage these fudges, so with stamp duty the fact its bought and sold again at a higher price by the bank has been ignored and instead there is just one stamp duty due based on the initial purchase price. 

Savings accounts are similar, you lend them your money, they "invest" it and give you a share of the profit which tends to be oddly similar to the interest rates offered on normal saving accounts. HMRC will simply treat it as interest.

Nasqueron

Sharia bans interest, it's not illegal, just a legacy of religious rules

eskbanker

To recycle the pithy summary from another poster years ago, Allah may not regard it as interest, but HMRC do....

Nasqueron

I always find it amusing that these "loop holes" exist, like an all powerful being somehow can't tell that paying interest on a debt is the same as paying the same amount as a fee or whatever. It's like those adverts on socials "God hates this one simple trick"