Shariah-compliant investing follows Islamic principles. It typically excludes certain activities and screens companies using financial criteria. Screening standards can differ, so understanding the method matters as much as the label.

A company is usually assessed on both what it does and how it is financed. Its main business must be permissible, while financial measures such as debt and interest-related income must stay within the limits of the chosen Shariah methodology.

Common Shariah screens exclude businesses centred on activities such as conventional interest-based financial services, alcohol, gambling and pork-related products. Some methodologies also exclude areas such as tobacco or weapons, so the exact list can vary.

Shariah screening is the process used to assess whether an investment meets a defined set of Islamic investment rules. For shares, this normally combines business activity screening with financial ratio tests and periodic review.

Shariah screening methodologies use financial ratios to assess companies, but their calculations differ. AAOIFI uses 30% limits against market capitalisation, while MSCI’s main Islamic indexes use 33.33% limits against total assets. DJIM and S&P Shariah also use 30% limits, but calculate them using different periods of average market capitalisation. MSCI additionally tests receivables and cash. These differences mean a company can pass one methodology and fail another.

Purification is the process of identifying a portion of investment income linked to incidental non-compliant activities and giving that amount to charity. The calculation depends on the Shariah methodology being followed.

An ISA is a UK tax-advantaged account. Investments held inside an ISA can grow without UK Income Tax on investment income or Capital Gains Tax on gains. For the 2026/27 tax year, the overall ISA subscription limit is £20,000.

Unused ISA allowance does not normally carry forward. If you do not use it by the end of the tax year on 5 April, that year's unused allowance is lost and a new allowance begins on 6 April.

Yes. Under current UK rules, adults can hold and subscribe to multiple ISAs, including multiple ISAs of the same type, provided the overall annual ISA allowance is not exceeded. Lifetime ISAs have separate subscription restrictions.

A Flexible ISA allows eligible withdrawals to be replaced within the same tax year without the replacement using more of your ISA allowance. Not every ISA is flexible, so the provider's terms matter.

A General Investment Account, or GIA, is a standard taxable investment account. Unlike an ISA or pension, it does not provide a special UK tax wrapper, so investment income and gains can be taxable depending on your circumstances.

A Junior ISA, or JISA, is a tax-advantaged account for children. The money belongs to the child and is normally locked until age 18. The Junior ISA limit for the 2026/27 tax year is £9,000.

A SIPP is a type of personal pension that gives the holder a range of investment choices. Contributions can receive pension tax relief, but pension allowances, access rules and tax on withdrawals are different from an ISA.

An ETF, or exchange-traded fund, holds a basket of investments and trades on an exchange. One ETF can hold many underlying investments, making it a convenient way to gain exposure to a market, index or investment strategy. Some ETFs apply Shariah screening; many do not.

An index fund aims to follow the performance of a chosen market index rather than selecting investments one by one in an attempt to outperform it. An index fund can be structured as an ETF or another type of fund.

Equities are ownership interests in companies, commonly called shares or stocks. Shareholders can benefit if a company grows or pays dividends, but they also take the risk that the share price falls or the company performs poorly.

Developed and emerging markets are classifications used by index providers to group countries with different market characteristics. Emerging markets can offer different growth exposure but may also involve greater political, currency, liquidity and market risks.

Sukuk are Islamic investment certificates structured around assets or activities rather than conventional interest-bearing debt. Their terms and risks vary, so it helps to understand what supports the payments and how the arrangement works.

Passive investing usually means following a predefined index or rules-based strategy rather than frequently choosing securities in an attempt to outperform the market. Index funds and many ETFs use this approach.

Diversification means spreading investments across different holdings, sectors, regions or asset types so that your outcome is not dependent on a single investment. It can reduce concentration risk, but it cannot remove all investment risk.

An accumulating fund reinvests income received from its holdings back into the fund, while a distributing fund pays that income out to investors. The underlying investments can be identical; the difference is what happens to the income.