Treasury minister Ed Balls has promised to improve access to core financial services to UK Muslims.
The forthcoming Finance Bill will seek to reconcile UK law with sharia law, which stipulates some behaviours which are difficult to sustain in the existing UK banking context, including a ban on earning or paying interest ('riba') which makes most savings and mortgage products on the current market unsuitable.
Islamic finance products have become increasingly available over recent years, but many providers continue to penalise Muslim customers, in effect, by charging disproportionate stamp duty and capital gains tax charges on particular products.
The Treasury reforms will aim to streamline tax imposed on diminishing musharaka (loans repaid in instalments) and takaful, a sharia-compliant form of insurance, with UK taxation practice.
The reforms aim "to ensure the tax and regulatory system will encourage the development of Sharia compliant products", Mr Balls commented.
Following Mr Balls' speech at the Euromoney Islamic finance summit, the chancellor's high-level group will discuss Islamic finance further at its next meeting in May.For more information about current accounts, click here.
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