Glossary · UK
What is Sharia Savings?
Savings accounts run on Islamic finance principles that pay an expected profit rate instead of interest, which is prohibited under Sharia law.
Full Definition
Sharia savings accounts are deposit products designed to comply with Islamic finance principles, which forbid riba (interest). Instead of paying guaranteed interest, the bank invests your money in Sharia-compliant assets and shares the returns, so you receive an 'expected profit rate' rather than a fixed interest rate. In practice the advertised rate is almost always paid as expected, and the products are typically structured so your capital is treated as a deposit. UK Sharia banks are regulated by the Financial Conduct Authority and Prudential Regulation Authority, and eligible deposits are covered by the Financial Services Compensation Scheme on the same basis as conventional accounts. Profit earned counts as savings income for tax and may use your Personal Savings Allowance. Sharia savings can also be held within an ISA wrapper, sharing the GBP 20,000 (2026/27) annual ISA allowance. They matter for savers seeking faith-consistent options without sacrificing FSCS protection or competitive returns.