Question

Assalamualaikum wa.

I have been using the governments help 2 save scheme where the government gives you certain percentage of what you’ve saved as a bonus for using this scheme.

So how it works is that I am only allowed to save anything from £1 to max £50 per month over the course of 4 years. You earn your first bonus after the first 2 years and last bonus at the end of the 4th year and you can not use this scheme again. You are only allowed to use this once. I am allowed to withdraw money from my savings at any point however it will effect the final bonus I earn.

My question is, is this bonus considered as interest or gift and is it permissible or not?

Jazakallah,
Wassalam

Answer

All the money deposited into a Help to Save account is held with National Savings & Investments (NS&I). NS&I is an Executive Agency of the Chancellor of the Exchequer that offers saving and investment products to the public. When saving or investing with NS&I, you’re lending to the government and your money is utilised to generate profit via various methods including the purchase of bonds and other investments.

Therefore, when one deposits money into a Help to Save account, they are essentially forwarding a loan to the NS&I, which the government guarantees to pay back with an additional bonus. Islamic law prohibits taking benefit from lending money.  The juristic principle in this regard mentioned in Radd al-Muhtar is “Any loan that draws a benefit is [a form of] usury”.

In light of the above, the government’s Help to Save scheme will fall under the prohibition of an interest-bearing loan. Therefore, it will be impermissible to deposit savings into such an account. Alternatively, you may wish to look into shariʻa compliant saving accounts or opt for a similar halal investment and hope for a good return. The warnings for dealing with interest are numerous in Qur’an and Hadith. “…but whoever returns (to dealing in riba), such are the dwellers of the Fire- they will abide therein” (2:275). Living in an interest-based society in the UK may make it challenging to avoid dealing with interest but this does not provide one with an excuse to freely indulge in it. Ultimately one should place their trust in Allah that He will provide and have firm faith that their success lies in abiding in that which is lawful.

https://www.nidirect.gov.uk/articles/national-savings-investments-nsi

Answered by:
Ifta Research Fellow

Checked & Approved by:
Mufti Abdul Rahman Mangera
Mufti Zubair Patel