sharia-compliant

Options
kidmugsy
kidmugsy Posts: 12,709 Forumite
First Anniversary Name Dropper First Post Combo Breaker
in ISAs & tax-free savings
Stray thought: I see sharia-compliant savings accounts where the literature states that they don't pay out interest but rather profits.

Income tax: does that mean that the quasi-interest is subject not to the savings allowance but instead to the dividends allowance?
Free the dunston one next time too.

Comments

  • AirlieBird
    AirlieBird Posts: 1,046 Forumite
    Options
    No, alternative finance return is treated as if it were interest.

    https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim2250
    (last paragraph)
    Did you really mean to put loose?
    Lose: no longer possess, not to retain, unable to find
    Loose: not firmly or tightly fixed in place
  • eskbanker
    eskbanker Posts: 31,254 Forumite
    First Anniversary Name Dropper Photogenic First Post
    Options
    According to https://www.telegraph.co.uk/finance/personalfinance/savings/12124992/Will-my-Sharia-compliant-savings-be-tax-free-from-April.html:
    HM Revenue & Customs (HMRC) confirmed that profits from Sharia accounts would count towards the personal savings allowance.

    A 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."
  • ghanchi
    ghanchi Posts: 4 Newbie
    Options
    Lloyds, United National Bank, Al Rayan Bank, BLME and Gatehouse are just a few of the banks offering Sharia-compliant savings accounts in the UK. The basics of Sharia law is that you may not profit from money - so savings accounts cannot pay interest. Instead they offer savers an expected profit rate. To achieve this return savers' money must be used in a productive way, meaning Islamic banks must invest it in ethical areas (no alcohol, meat, gambling, tobacco, arms etc).
    Money is covered by the Financial Services Compensation Scheme up to £85,000 where the bank is registered in the UK and authorised by the Financial Conduct Authority.






  • eskbanker
    eskbanker Posts: 31,254 Forumite
    First Anniversary Name Dropper Photogenic First Post
    Options
    ^ That would have been a good answer if OP's question had been 'can you tell me all about Sharia accounts', but, as the question was specifically about taxation of returns on such accounts, which it didn't even attempt to answer, it rather misses the point!
  • george4064
    george4064 Posts: 2,814 Forumite
    First Anniversary Photogenic Name Dropper First Post
    Options
    Might be of interest, there is a fund called HSBC Amanah Fund which I believe complies with Sharia.
    "If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes” Warren Buffett

    Save £12k in 2021 - #027 £15,268 (76%)
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.4K Banking & Borrowing
  • 250.2K Reduce Debt & Boost Income
  • 449.8K Spending & Discounts
  • 235.5K Work, Benefits & Business
  • 608.5K Mortgages, Homes & Bills
  • 173.2K Life & Family
  • 248.1K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards