NFT Investments

For Muslim investors in the UK, an ISA is best understood as a tax wrapper. The Sharia question depends on the savings or investments placed inside it. This means the wrapper can help protect eligible returns from tax, but it does not decide whether the money inside it is Sharia-compliant.

That depends on what the ISA holds, how the return is generated, and whether the underlying account, fund, stock, sukuk, or investment structure follows Islamic finance principles. A Cash ISA that pays conventional interest raises a different issue from a Stocks and Shares ISA invested in Sharia-screened assets.

For serious investors, the better question is how an ISA fits into a wider halal wealth plan. Used properly, it can support tax-efficient saving, long-term investing, and portfolio structure. But relying on the wrapper alone may lead to an inaccurate assumption of Sharia compliance if the underlying assets remain unverified. 

Are ISAs Halal?

Yes, ISAs can be halal, but they are not automatically Sharia-compliant.

The reason is simple - an ISA is only a tax wrapper. It decides how eligible savings or investment returns are treated for tax purposes in the UK. It does not determine whether the money inside the account is halal.

The Sharia question depends on what the ISA actually holds. This could be cash, investment funds, individual shares, sukuk, or another investment arrangement. Each one needs to be assessed based on how the return is generated and what the money is exposed to.

A conventional Cash ISA that pays interest would be problematic for many Muslim investors because the return comes from riba. A Sharia-compliant Cash ISA works differently. Instead of paying interest, it may use an expected profit model, where the provider aims to generate profit through activities structured around Islamic finance principles.

A Stocks and Shares ISA can also be halal, provided the investments inside it are Sharia-compliant. That usually means avoiding prohibited sectors, checking debt and interest exposure, and using funds or assets that are screened according to recognised Sharia standards.

The Key Distinction: Wrapper vs Underlying Asset

The most important distinction with halal ISAs is the difference between the wrapper and the underlying asset.

The ISA wrapper is the tax structure. It determines whether eligible returns can be received without UK income tax or capital gains tax. It does not, by itself, define whether the investment is halal.

The next layer is the account or asset inside the ISA. This may be a cash account, a fund, individual shares, sukuk, or another eligible investment. This is where the Sharia assessment begins, because the money is now exposed to a specific product, company, contract, or return mechanism.

Then comes the return source. Is the return generated through interest, profit, dividends, rent, trade, or capital growth? The distinction is vital for Muslim investors because the same ISA wrapper can house multiple products with vastly different revenue-generation models. 

Screening is another important layer. A fund may describe itself as Islamic, ethical, or responsible, but investors still need to understand who verifies Sharia compliance, how often the portfolio is reviewed, what standards are being used, and how non-compliant income is handled. 

Purification may also matter, especially with equity investments. If a small amount of non-compliant income is identified, investors need to understand whether purification is calculated, disclosed, and handled clearly.

Tax efficiency is separate from Sharia compliance, as the wrapper strictly dictates the tax treatment of returns rather than the permissibility of the underlying assets. 

Types of Halal ISAs in the UK

There are several types of ISAs available in the UK, but the same principle applies to all of them. The ISA wrapper itself remains a neutral administrative tool. The critical factors involve the specific methods used to hold, deploy, and distribute capital back to the investor.

Halal Cash ISA

A halal Cash ISA is usually used for liquidity and lower-risk savings. It may suit investors who want to keep money accessible, preserve capital, or set aside funds for a near-term goal.

The main issue with conventional Cash ISAs is that they pay interest. For many Muslim investors, that makes them unsuitable because the return is based on riba. Islamic Cash ISAs usually work differently. Instead of paying interest, the provider offers an expected profit rate, with returns generated through Sharia-compliant activity.

This makes a halal Cash ISA more useful for capital preservation than long-term wealth growth.

Halal Stocks and Shares ISA

A halal Stocks and Shares ISA is more relevant for investors who want long-term, tax-efficient growth. Depending on the provider or platform, it may hold Sharia-screened funds, ETFs, individual equities, sukuk, or other eligible investments.

The important point is that a Stocks and Shares ISA is not halal just because it avoids cash interest. The investments inside still need to be screened properly. This includes checking the sectors involved, the company’s financial ratios, debt exposure, non-compliant income, and whether purification is required.

For serious investors, this is often the more important ISA to understand because it can play a larger role in portfolio growth over time.

IFISA / Innovative Finance ISA

An Innovative Finance ISA, or IFISA, can hold certain alternative finance or peer-to-peer style investments. The wrapper itself is neutral, just like with other ISAs.

The issue is the underlying contract. Many IFISA products are based on interest-bearing lending, which would be problematic from a Sharia perspective. Others may involve asset-backed or business finance structures, but that does not automatically make them halal.

A Sharia-compliant IFISA needs to be assessed by looking at how the return is generated, what contract is used, and whether the investment has proper Sharia oversight.

Lifetime ISA and Junior ISA

Lifetime ISAs and Junior ISAs follow the same basic rule. The wrapper does not decide Sharia compliance; the underlying cash account, fund, or investment does.

A Lifetime ISA may be used for a first home or later-life savings, while a Junior ISA may be used for a child’s future. In both cases, Muslim investors still need to check what the money is actually invested in.

How Should Serious Muslim Investors Use ISAs? 

For serious Muslim investors, an ISA should have a clear job. It should not be chosen simply because it is available, tax-efficient, or labelled as Islamic. 

The right ISA depends on what the investor wants the money to do.

A halal Cash ISA may be suitable for short-term reserves, emergency savings, or money that needs to remain relatively accessible. It is usually more about preserving capital than building long-term wealth.

A halal Stocks and Shares ISA may be more suitable for long-term growth. This can make sense for investors who want exposure to Sharia-screened equities, funds, ETFs, sukuk, or other compliant assets while using the tax benefits of the ISA wrapper.

An IFISA may be relevant for investors looking at alternative income or asset-backed finance, but only if the underlying structure is genuinely Sharia-compliant. The contract matters more than the label.

A Junior ISA can support children’s wealth planning, while a Lifetime ISA may be relevant for a first home or later-life savings if the rules and investment options suit the investor’s situation.

Investors managing substantial capital benefit from viewing ISAs as a single component within a broader, integrated wealth strategy. An ISA functions best when integrated with pensions and taxable investment accounts, ensuring all components of the wealth stack work in tandem. The aim is to build a portfolio where each part has a clear purpose, an appropriate time horizon, and a structure that remains aligned with Islamic finance principles.

Halal ISA vs SIPP vs Taxable account

An ISA is only one part of the wider picture for any serious investor. It should usually be compared with pensions and taxable investment accounts before deciding where new capital should go.

An ISA is useful for flexible, tax-efficient saving and investing. It can support cash savings, long-term investments, or a mix of both, depending on the provider and product. The main limitation is the annual ISA allowance, so investors with larger amounts to deploy may need to use other wrappers as well.

A SIPP is different. It is designed for retirement-focused investing and may offer valuable tax advantages, but access is restricted until later life. This makes it useful for long-term planning, but less suitable for money that may be needed sooner.

A taxable investment account can be useful once ISA or pension allowances have been used, or where the investor wants more flexibility. The trade-off is that income, dividends, or gains may be taxable.

The Sharia question applies to all three. A SIPP is not automatically halal or haram. A taxable account is not automatically halal or haram. The same is true of an ISA. The core concern involves the specific assets held within the wrapper, the mechanics of how profit is produced, and the alignment of all underlying contracts with Sharia standards. 

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In recent decades the landscape and number of small and medium-sized (SMEs) businesses has seen a huge transformation. Many of these businesses are formed and led by Muslim entrepreneurs such as Shahzad Younas (Muzmatch), and Ufuk Secgin (Halalbooking.com). With the growth of Muslim entrepreneurs comes an increase in demand for Islamic finance based lending solutions and strategies.

SMEs dominate the world business landscape. They account for approximately 60% of private sector employment. It therefore makes sense that SMEs will require funding options in order to sustain and succeed as a business. With close to 60% of SMEs failing in the first few years, ensuring they have access to adequate funding is critical.

SME lending has historically been centred on the traditional models of funding that are interest based. However, there has recently been a move towards SME lending based on Islamic finance principles.

In the UK, SMEs are considered to be firms that employ less than 250 employees. UK SMEs play a significant role in the UK economy, and the government is keen to ensure that they are sustainable and successful.

SURGE OF SMEs

SMEs account for a significant portion of the world economy. They not only contribute to employment and job creation, they also play a leading role in sustainability and community impact. In the UK a staggering 99.2% of the business population comprises of SMEs.

SMEs are considered to be major employers and they drive local economy growth.

Recent statistics found that the total value of loans to SMEs in the UK reached a whopping £65.1 billion in 2022. This was an increase of over 10% on the previous year and was the official highest on record.

New business lending in the UK totals in the region of £259 million. Demand from SMEs for inclusive and diverse lending options continues to grow.

SMEs AND SOCIAL IMPACT

SMEs play a critical role in society and our economy. Not only do they facilitate and generate employment, they also increase the flow of money from individuals to industries and through society.

At the beginning of 2023 there were estimated to be 5.5 million SMEs in the UK, an increase of 0.8% over the previous year. The professional, scientific, and technical industries accounted for 14% of all SMEs while another 10% are in the retail, trade, and wholesale industry.

Beyond contributing to the economy, SMEs can impact different areas of society. They encompass social development, community wellbeing, alleviating local poverty, job creation, innovation, and reducing income inequality.

SMEs also tend to be more forthcoming in embracing sustainable and ethical practices. They foster financial inclusion by providing local opportunities for local people.

WHY SMEs ARE THRIVING

There are 1 million SMEs in London and over 852,000 in the South East. These SMEs account for 34% of the UK business population. SMEs account for 60% of the employment in the private sector within the UK. They also account for over 50% of the employment in the UK.

As SMEs have grown, so has the need to provide lending that meets their particular demands. Many SMEs do not have the stellar trading history and records of large business.

SMEs therefore need an innovative approach when it comes to lending and funding.

SMEs can come with limited credit history and collateral but bags of entrepreneurial dynamism and innovation.

Distinct from larger businesses, SMEs have unique considerations relating to scale, financials, structure and characteristics. They may have limited access to capital markets, and therefore need tailored and bespoke financial solutions. A one size approach to lending does not meet the needs of SMEs that provide a range of services in the economy.

This is where Islamic finance really comes forth as a viable option for SMEs.

Sme Lending

SME's often demonstrate adaptability and resilience when faced with economic fluctuations, challenges and issues. SMEs are well placed to weather economic downturns and maintaining local communities through change. Lending to SMEs in the UK amounted to £4.8 billion in the second quarter of 2023.

In 2022 36% of SMEs used external funding and finance options. Over 69% of SMEs have stated that they turned to lending options due to cash flow related issued.

For SMEs, obtaining favourable funding options is not as easy as it is for big companies. Perhaps this is the reason more and more SMEs are turning to Islamic finance services.

Islamic finance is a great option of raising funds for SMEs for many different reasons.

For Muslim SMEs that want to avoid interest and want to be Sharia compliant, Islamic finance provides funding options not available in the wider banking sector. Islamic finance is able to adapt to the requirements of Muslim SMEs ensuring compliance and inclusion.

It is also worth mentioning that Islamic finance is based on a risk and profit sharing arrangement. This means that the funder and the SME share the profits AND the risks.

For SMEs, this is a huge benefit as it creates a sense of partnership with support for the new SMEs on the market. SME borrowing has a huge impact on their operations and customer base growth, so it is essential that the SME lending market continues to diversify and educate itself on the needs of SMEs.

Islamic finance is asset backed finance. What this means for the SME is that the financing is linked to tangible assets. In the long term, this is a more sustainable and stable form of financing for them.

Diversity In Business

The great thing about SMEs that often goes unnoticed is how impactful they are when it comes to inclusion and diversity.

In 2020, 16% of SMEs were led by women. Almost 24% of SMEs were equally led by men and women.

Workplace diversity is essential for SMEs as they often operate within diverse local environments. With Millennials currently making up 50% of the UK's workforce (and Gen Z accounting for 27% by 2025), businesses lacking diversity are missing out.

When it comes to investment for the future and the business operations of the SME, they need to ensure they recruit and retrain properly.

Empowerment Through Enterprise

SMEs are known to encourage empowerment through enterprise. This should be done at every stage of the SME process from project initiations, implementations, cost analysis, research, and education.

The result is that SMEs can ensure that they can recognise and eliminate barriers to growth. Enterprise enables SMEs to plan and prepare, ensuring they have the right insight into how to fund their operations and continue to succeed.

For Muslim entrepreneurs there are additional considerations relating to compliance with Islamic finance rules when partaking in financial services and considering lending options.

Why should Muslim SMEs focus on Islamic finance lending:

• Adherence to Islamic rules relating to financial transactions
• Interest free finance options
• Asset backed financing
• Profit and risk sharing
• Flexible finance structures and services
• Financial inclusion without compromising ethics and religious principles
• Community impact
• Flexible payment options
• Lending is not connected to an industry, product or service deemed impermissible by Islam (ie alcohol, gambling, porn)

Faith In Business

Those SMEs that are looking for ethical and sustainable models of finance and lending can find answers in Islamic finance.

Risk sharing, loss sharing, ethical considerations and non-exploitative practices all underpin Islamic finance and support SMEs in a way that traditional financial service cannot.

Introduction

Zakat is the third pillar in Islam and plays a significant role in the way Muslims live and conduct their financial affairs. The recipients of zakat are a very specific group of people as outlined in the Quran, and there is a specific calculation involved.

Our online zakat calculator assists with calculating the amount of zakat that is owing.

Understanding Zakat And Its Obligations

WHAT IS ZAKAT?
The word zakat means growth and purification in Arabic and refers to the mandatory obligation to give a portion of wealth accrued to charity. Zakat is a fundamental obligation for all Muslims who meet the criteria, and its purpose is to purify wealth and create economic equality and enhance social welfare.

According to Islamic teachings, zakat is a fundamental act of worship. The Quran (2:110) states: 'Establish prayer and give zakat'

WHO NEEDS TO PAY ZAKAT?
Muslims who are required to pay zakat must first understand if they have accrued the minimum amount of wealth required before they become eligible to pay zakat. This is known as nisab and this is worked out based on the equivalent of 85 grams of gold or 595 grams of silver.

Those eligible to pay zakat include the following:

• Adults who have reached puberty and have wealth over the nisab threshold.
• Adults who have full mental capacity.

WHAT ASSETS COUNT TOWARDS ZAKAT?
Zakat is payable on different types of wealth:

• cash
• silver
• gold
• business assets
• investment income
• agricultural produce.

When And How Much Zakat To Pay

Zakat is due on wealth that you have been in possession of for one lunar year. It's also important to note that you can deduct immediate debts from zakatable wealth (see below).

You can pay zakat at any time of the year through instalments or in one lump sum.

Calculating Zakat Step-By-Step Using A Zakat Calculator

Muslims are expected to pay 2.5% of their zakatable wealth every year. Follow these steps to work out how much zakat you need to pay:

• Determine your zakatable wealth total by adding up your assets and deducting immediate debts.
• Ensure that you meet/exceed the nisab threshold
• Apply the 2.5% rule
• Use the online zakat calculator to work out what you need to pay

Always visit a reliable zakat calculator website.

Deductions And Liabilities

There are certain debts and liabilities that be deducted when making your zakat calculation.

The following deductions are allowed:

• short term debts such as credit card balances and small loans that become due in the zakat year.
• for long term debts such as mortgages you can only deduct the payment owing in that zakat year.
• living expenses including bills, rent, good costs, transport.
• unpaid wages to employees.
• business liabilities for the zakat year.

Please note that future debts and expenses are not deductible.

Zakat Payment And Its Impact

Zakat is more than a financial payment, it goes beyond wealth distribution into the realms of spiritual growth, economic justice and fulfilling an important religious obligation.

Paying zakat on time fulfils an essential Islamic obligation and strengthens the relationship with Allah.

Timely payment of zakat leads to increase in blessings and purification of our wealth.

How To Pay Your Zakat

Zakat can be paid in different ways. You can pay zakat direct to individuals who are eligible to receive zakat. Zakat can also be paid to charities and global zakat funds.

Many Muslims choose to pay zakat online by utilising online zakat calculators.

Receiving Zakat

There are eight groups of people to whom zakat can be given:

The needy (this includes people whose earnings fail to cover basic needs such as food, home, water, clothing)

Those in poverty (who have little to no personal belongings and no means of earning a living)

Those employed to administer zakat monies

The wayfarer

People whose hearts have been reconciled to the faith In the cause of Allah (SWT)

People in debt

People in bondage

Recipients of zakat should not be members of your immediate family such as your spouse, parents or children. Other non-immediate relatives can be recipients of your zakat payments.

Many people give to charity throughout the year, for any donation to qualify as fulfilment of the zakat obligation, then there must be an intention to give the money as zakat.

Common Questions And Expert Advice

WHAT IS NISAB?
Nisab is the minimum amount of wealth you need to have before you become eligible to pay zakat. Typically nisab is the equivalent of 595 grams of solver or 85 grams of gold.

DO I PAY ZAKAT ON MY HOME?
Zakat is not payable on your primary home. If you have rental properties then zakat is payable on the income generated.

CAN I GIVE ZAKAT TO MY FAMILY?
You cannot give zakat to immediate family, ie those already dependant on you such as your partner and children. You can pay zakat to extended family members if they are eligible.

ARE ONLINE ZAKAT CALCULATORS ACCURATE?
Yes, as long as you insert the correct information based on your personal circumstances then zakat calculators are an excellent way to calculate your zakat.

IS ZAKAT PAYABLE ON MY RETIREMENT SAVINGS?
If you have full access to these savings and you meet the nisab threshold then zakat is payable.

WHAT IF I FORGET TO PAY ZAKAT?
Use an online zakat calculator to calculate what you owe and pay your zakat as soon as you can.

IS ZAKAT PAYABLE ON STOCKS AND SHARES?
Yes, if the value exceeds the nisab threshold then zakat is payable.

SHOULD NISAB BE CALCULATED ON GOLD OR SILVER VALUES?
In the United Kingdom you can use either the gold or silver value. Many scholars believe that using the value of silver is preferable as it means the amount of zakat increases. If you have assets that mainly consist of gold then it is sensible to use the gold nisab.

WHAT IS THE ZAKAT YEAR?
The zakat year begins on the date on which you first possessed the wealth that took you over the nisab threshold. This will be the start of your zakat year. The zakat payment will therefore become due when the year has elapsed.

HOW DOES ZAKAT APPLY TO YOUR INVESTMENTS ON THE WARDUS PLATFORM?
For all of you that pay zakat, it would be on the total outstanding amount payable to you from your investments via Qardus. The investment is based on a financing arrangement which involves the buying and selling of commodities, and therefore, we believe that these assets are zakatable in nature. Therefore, investors who pay zakat would use the capital plus the profit due to them to calculate the amount of Zakat payable.

Please note that Qardus does not provide tax or other financial advice and that if advice is needed, you should consult an appropriately qualified professional.

Conclusion

Calculating zakat accurately and paying it in a timely manner ensures that it reaches the most vulnerable in society. Paying zakat fulfils one of the core pillars of Islam.

Using an online zakat calculator not only ensures the payment you make is calculated accurately, it saves you time and helps you to make the sometimes complex set of calculations.

Zakat calculators also guide you to eligible recipients and make it easier for you to track your zakat payment history and accountability. The calculations eradicate errors and provide an audit trail. If you have any specific questions about your zakat payment, always remembers to consult with expert scholars.

Use the Qardus zakat calculator here.

Please note that the prices information and values mentioned above are for example purposes only. For an accurate figure of the zakat you are liable to pay then it is always best to use the zakat calculator, and also conduct your own research and obtain qualified advice where required.

Qardus do not offer financial or tax advice and if advice is needed, this should be sought from a qualified professional.