Government continues commitment to London as Islamic Finance centre

The latest Budget shows the Government remains committed to enhancing London’s position as an international player for Islamic Finance and offering the business community access to competitively priced financial products, regardless of faith.

Plans have been announced to examine the feasibility of a sovereign sukuk as well as a consultation on relief on stamp duty land tax (SDLT) for alternative finance investment bonds.

Standard and Poor estimates the global market to be worth £250 billion, growing at 15 per cent per year.

London is already in a strong position: since July 2007, more than 15 sukuk (raising nearly £5 billion) have been listed in the capital.

The proposed changes will be a significant boost for the UK as it aims to encourage more foreign investment from Islamic regions.

The Government also announced amendments to legislation to classify alternative finance investment bonds as loan capital for stamp duty and stamp duty reserve tax (SDRT).

In addition, changes to existing corporation tax and income tax rules on alternative finance arrangements by regulation could be made if and when required.

Richard Thomas, chairman of Gatehouse plc and chairman of UK Trade & Investment Financial Services Sector Advisory Board (FSSAB) Islamic Financial Services Sub Committee, explained: "The UK Government through legislative, regulatory and fiscal initiatives and the private sector via new Sharia-compliant institutions such as Gatehouse plc have made enormous strides towards creating a level playing field for Sharia-compliant finance in the UK.”