Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Growing Islamic finance firms lobby Britain for tax relief

Stock MarketsJun 13, 2018 08:20AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. Growing Islamic finance firms lobby Britain for tax relief

By Bernardo Vizcaino

(Reuters) - Firms involved in Islamic finance are lobbying the British government for tax reforms, arguing that the treatment of some sharia-compliant structures is hindering their growth.

Britain has actively pursued Islamic finance to become the Western world's biggest hub for it and banks are now seeking to ensure tax parity in areas such as mortgage refinancing as they compete head-on with their conventional peers.

Islamic finance forbids interest payments and transactions often require multiple title transfers of underlying assets, which can trigger double or even triple tax charges.

More than 20 firms, including Gatehouse Bank, Bank of London and The Middle East , Abu Dhabi Islamic Bank (AD:ADIB) and Qatar Islamic Bank (AD:QISB), offer Islamic financial products in Britain.

The country has previously addressed the adverse tax treatment for Islamic bonds and residential mortgages, helping Islamic banking assets reach more than $5 billion pounds in 2016, while London has attracted over 65 listings of Islamic bonds worth a combined $48 billion, lobby group TheCityUK said.

But this has created concerns over refinancing mortgages or switching them from a conventional to an Islamic bank, which can trigger capital gains taxes, said Samir Alamad, head of sharia compliance and product development at Birmingham-based Al Rayan Bank, which is owned by Qatar's Masraf Al Rayan (QA:MARK).

"This is the more pressing issue as it is affecting Islamic banks and their customers," said Alamad, one of those lobbying British tax authorities. Taxes on investment property and commercial finance also need clarification, he added.

In the short term, the government could amend the Finance Act, but a longer-term solution may require a broad framework to address all types of Islamic transactions, Alamad said.


The British tax authority, Her Majesty's Revenue and Customs, told Reuters it wanted to ensure that tax consequences of refinancing Islamic mortgages are not disadvantageous when compared to standard mortgages and that work was ongoing.

The Chartered Institute of Taxation, a British professional body, has also presented a submission to authorities which some think could open the way to change on Islamic finance.

"It may only be a matter of time before current legislation is amended to provide further express reliefs and clarity," said Imam Qazi, partner and Islamic finance lead at law firm Foot Anstey.

Taxation is becoming more pressing because their product range has expanded and now includes savings accounts, home purchase plans, a pension scheme and business start-up financing, said Qazi.

Gatehouse recently introduced buy-to-let finance and plans to offer home owner finance through brokers, Qazi said.

Rosette Merchant Bank, a sharia-compliant firm, plans to diversify its client base beyond the Gulf to tap southeast Asian markets such as Malaysia, said chief executive Sam Broadhead.

The firm closed around 200 million pounds of investment deals in the past 12 months, he said.

"We are looking to expand outside our core real estate offering into other innovative sharia-compliant investment areas, for example a fintech supply chain finance solution and several capital markets projects."

Abu Dhabi Islamic Bank is working on a new home finance product, while Bank of London and The Middle East is expanding its wealth management business.

There are concerns that future changes could also have an impact on the sector.

The government's 2017 budget has proposed changes starting from 2019 to the tax status of non-resident investors and the way they are taxed on real estate disposals.

Law firm Ashurst says such changes could affect many Middle East Islamic investors who buy into real estate through unit trusts and offshore funds.

Growing Islamic finance firms lobby Britain for tax relief

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email