Government Actions

Chronology

1995: Governor of Bank of England Lord Edward Geoge speech on importance of developing Islamic finance in London

2004: Financial Services Authority (FSA) licenses the Islamic Bank of Britain

Finance Act 2003:  abolition of double Stamp Duty Land Tax  makes Islamic mortgages possible

Finance Act 2005: tax reforms to render murabaha and mudaraba more competitive;  Alternative Finance Arrangements (AFA); Islamic savings schemes for individual savings accounts; trust funds and personal equity plans

December 2005 Financial Services and Markets Act 2000 amended to enable home purchase plans by Islamic mortgage to be regulated by the FSA

Finance Act 2006: AFA status extended to diminishing musharaka (Islamic mortgage); revised tax treatment of Islamic agency agreements;  relief from multiple stamp duties extended from individuals to companies; Islamic lease agreements recognised for asset finance

2007: First government consultations and analyses of Islamic investment certificates (sukuk) [1] 

Finance Act 2007: reformed tax treatment of Islamic investment certificates (sukuk);  Islamic leases brought under FSA oversight

2007: UK Trade & Investment (UKTI) sets up body to produce strategy for promoting Islamic Finance; Islamic Finance Expert Group appointed

2008 UKTI announces strategy to spread awareness of Islamic Finance

FA 2009 Stamp Duty Land Tax relief for Islamic investment certificates based on Lease Contract

October 2009: consultation on Alternative Finance Investment Bonds (sukuk) designation (AFIB)[2]

FSMA 2000 (Regulated Activities) order 2010: created

2010: first UK corporate sukuk – International Innovative Technologies [3]

2013: Gatehouse Bank – issued first sterling sukuk issuance

March 2013: Government appoints Islamic Finance Task Force (IFTF)

February 2014: Islamic mortgage/home purchase plans included under government  Help to Buy Scheme

Two narrative accounts of the standing and history of Islamic finance in Britain

Representative sources from which portions of the above have been drawn or from which the above has been informed, and further reading.

[1] The DMO and Treasury feasibility study conducted in consultation with the Islamic Finance Experts Group (‘IFEG’); IFEG was established in April 2007 (June 2008 Consultation at 1.1). On regulatory adjustments in the UK: Ahmed Belouafi and Abderrazak Belabes, ‘Islamic Finance in Europe: the regulatory challenge,’ Islamic Economic Studies Vol 17 No 2 (January 2010), 33-53 at 45-48. What follows will consider only ijarah sukuk as the UK reforms to date do not cover all types of sukuk or even all those currently exhibited by global markets.

[2] HM Treasury and FSA, ‘Legislative framework for the regulation of alternative finance investment bonds (sukuk): summary of responses (October 2009).

[3] Millennium Private Equity invested in UK’s International Innovative Technologies issued through a Cayman Islands Special Purpose Vehicle (‘SPV’), ‘Regulatory reform pushes UK corporate sukuk’ in International Financial Law Review 6 September 2010. And David Oakley ‘First UK Islamic bond launches,’ Financial Times 16 August 2010.