Sukuk al ijara—SDLT reliefs under FA 2009, Sch 61
Produced in partnership with Sarah Squires of Old Square Tax Chambers
Sukuk al ijara—SDLT reliefs under FA 2009, Sch 61

The following Tax practice note produced in partnership with Sarah Squires of Old Square Tax Chambers provides comprehensive and up to date legal information covering:

  • Sukuk al ijara—SDLT reliefs under FA 2009, Sch 61
  • Background to Schedule 61
  • SDLT ijara relief—effect and how to claim
  • SDLT relief for first transaction
  • Withdrawal of SDLT relief for first transaction
  • SDLT relief for second transaction
  • Release of HMRC charge
  • Substitution of replacement land
  • SDLT relief for sukuk certificates
  • Why is SDLT relief required for sukuk al ijara certificates?
  • More...

Sukuk (singular form: ‘sakk’) is a type of Shari’a financing arrangement also referred to as Islamic bonds or certificates. For more information, see Practice Note: Sukuk—investment bond arrangements and their UK direct tax treatment—What are sukuk? Sukuk may benefit from the UK tax treatment provided to alternative finance investment bond (AFIB) arrangements if all the conditions are met. For more information on those rules, see Practice Note: Sukuk—investment bond arrangements and their UK direct tax treatment.

Sukuk al ijara is a particular form of sukuk. Under a sukuk al ijara, the asset held by the issuer on trust for the investors in the sukuk (the certificate holders) is often land. The issuer acquires an interest in land by way of a sale and leaseback—it is this arrangement that is the ijara. For more information, see Practice Notes: Sukuk al ijara—tax reliefs for sale and leaseback arrangements—What is sukuk al ijara? and The structure and elements of a Sukuk transaction. Because a sukuk al ijara involves actual transactions in land, this arrangement can trigger tax costs that would not be triggered in respect of an equivalent conventional bond arrangement.

UK tax legislation includes a series of reliefs that apply specifically to sukuk al ijara. These are contained in Schedule 61 to the Finance Act 2009 (Schedule 61). These reliefs are aimed at eliminating the tax costs

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