Peter Muir, tax partner at Deloitte, said: “Reforms to the taxation of Islamic finance should be applauded. The UK is the only country which is changing legislation to create a level playing field for both individuals and companies investing in Islamic finance products. 

Reform of sukuk (Islamic bonds) is the latest addition to the suite of specific legislation that gives certainty to the taxation of Islamic financial products.  Before this reform was introduced, there was ambiguity around how capital gains tax, income tax and capital allowances would apply to these products. 

“Gordon Brown seems to have taken a personal interest in ensuring Islamic products are brought into a level playing field.  This is intended to meet the financial needs of the Muslim community as well as, increasingly, non-Muslim investors in these products.  From a capital markets perspective, the reforms are a boost to the City of London, improving its global competitiveness in the Islamic finance market.  Notably, the measures reach out to a potentially much wider group of international exchanges who can be given tax recognition in the UK in relation to ‘sukuk’ bonds.”