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Are ISAs Shariah compliant?

Answered as per Hanafi Fiqh by Darulfiqh.com


Are ISAs Shariah compliant?

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.


Individual Savings Account (ISA) were introduced in 1999 by the British Government.  ISA’s are a tax-efficient wrapper for savings and investments.  There are two types of ISA:
1)    Cash ISAs
2)    Stocks and shares ISAs

Conventional Cash ISAs are non-Shariah compliant as they are typical interest-based savings accounts.  Hence, conventional cash ISAs are non-Shariah compliant and not permissible.

Conventional stocks and shares ISAs can be invested in shares, bonds, funds or investments trusts.  Any stocks and shares ISA available in the market must be screened for Shariah compliancy before a ruling can be passed on the permissibility of a particular stocks and shares ISA.

There are ISAs in the market certified as Shariah compliant.  They have been approved by the respective Shariah boards of Islamic financial institutions.  One may approach such Shariah boards and get clarity on these products and follow their approvals of such products.

And Allah Ta’ālā Alone Knows Best
Mufti Faraz Adam,
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This answer was collected from DarulFiqh.com, which is operated under the supervision of Mufti Faraz ibn Adam al-Mahmudi, the student of world renowned Mufti Ebrahim Desai (Hafizahullah).

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