Darling to swoop on Sharia loophole
The chancellor is set close a loophole in Sharia finance rules which avoids stamp duty on commercial property
Chancellor Alistair Darling is expected to close a loophole in Sharia finance
rules which has enabled commercial property investors avoid paying stamp duty on
more than £1bn of deals, The Times reports.
Next week’s budget could tighten rules on mortgages which comply with Islamic
law after commercial property developers discovered a quirk in the legislation
which enabled them to escape stamp duty.
The 2005 Budget brought in measures to correct the anomaly but
unintentionally created a tax avoidance loophole property developers have
flocked to exploit. More than £1bn of commercial property deals over the past
two years have escaped stamp duty at 4%.
Senior city tax lawyers, commercial property agents and a head of asset
finance for one of Britain’s biggest banks all say increasing numbers of office
sales valued from £50m to £100m or more have been using the latest
Sharia-compliant financing to take advantage of the loophole, although many of
those buying and selling the properties have no cultural imperatives to use
Sharia.
Further reading:
Treasury hopes to make UK ‘gateway to Islamic trade’