Islamic Finance In The UK: Recent Developments Building On Strong Foundations

The UK has sought to put itself at the forefront of Islamic finance and made a loud statement of intent in 2014 with the issuance of its GBP200 million (US$312.4 million) Sukuk – the first to be issued by a European government. While this was certainly a high point for Islamic finance in the UK, it actually represents the culmination of years of positive steps by successive British governments to promote Islamic finance in both the domestic retail markets and in international financial markets. BARRY COSGRAVE provides an overview of the state of Islamic finance in the UK.

The Finance Act 2003 changed the way the Stamp Duty (a tax on property sales in the UK) applied to Shariah compliant mortgages. Shariah compliant mortgages (which commonly use Ijarah or diminishing Musharakah structures) previously gave rise to a charge to stamp duty both on the purchase of a property at the initiation of the financing and at discharge of the financing upon repayment in full to the