Which Junior ISAs are Shariah compliant?
The question, as received
Question: Which Junior ISAs are Shariah compliant?
The answer
One should only invest in a Junior ISA that is clearly certified as Shariah compliant, has a Shariah board governing the product, and has annual Shariah audits taking place.
Condition: Only a Junior ISA certified Shariah compliant, with a Shariah board and annual Shariah audits.
Explanation
A Junior ISA (Individual Savings Account) is a special type of savings account designed for children in the UK. It’s a way for parents, guardians, or family members to save money for a child’s future in a tax-efficient manner.There are two types of Junior ISAs.
- Cash Junior ISAs
- Stocks and Shares Junior ISAs.
Conventional Cash Junior ISAs are not Shariah compliant. Cash ISAs are held in interest-bearing accounts, and as such, accrue Riba.
In regard to Stocks and Shares Junior ISAs, the underlying investments must be screened for Shariah compliance. In order to benefit from a Stocks and Shares ISA, one must ensure that the financial institution that is offering the ISA has a reputable Shariah board and has proper Shariah governance in place to oversee the ISA. If this is the case, then one may invest in a Shariah-compliant Junior ISA.
And Allah knows best.
Maulana Inaamul Hasan Chothia
Reviewed and approved by Mufti Faraz Adam
References
لأن الربا هو الفضل المستحق لأحد المتعاقدين في المعاوضة الخالي عن عوض شرط فيه (الهداية)
Based on the Hanafi school and on the question as it was asked. Another mufti may reach a different conclusion. Read the disclaimer.