Islamic law (the Shari'a) prohibits lending at interest. Therefore, Muslims and any other individuals or businesses who wish to observe Shari'a law may enter into ‘alternative finance arrangements’ that have a similar economic effect to deposits or loans, but which do not involve interest.

Legislation on alternative finance arrangements for the purposes of income tax (and corporation tax) was first introduced by Finance Act 2005, Pt. 2, Ch. 5. The rules were extended by Finance Act 2006 and Finance Act 2007 and subsequently rewritten by TIOPA 2010, Sch. 2 into ITA 2007, Pt. 10A (and CTA 2009, Pt. 6, Ch. 6 for corporation tax purposes (see ¶718-250)).

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