Wednesday 23 Shawwal 1440 - 26 June 2019

Ruling on taking out insurance to pay inheritance tax


Publication : 25-01-2010

Views : 8428


In some countries, if a person dies the heirs are obliged to pay taxes on the property of the deceased. For example, if the deceased left behind £400,000, the government will take £40,000 in the name of inheritance tax. Based on that, the estate cannot be divided in accordance with Islamic sharee‘ah.
My question is: is it permissible to buy insurance for the inheritance tax, as this insurance will cover the taxes imposed by the government on a person's estate?.
Praise be to Allaah.

There is no doubt that taking taxes on the estate and other property of people is something haraam and an obvious injustice and consuming people's wealth unlawfully. We have explained the prohibition on taxes in the answer to question number 39461

But the fact that this injustice is affecting you does not make it permissible for you to do something haraam, which is taking out insurance which involves a lot of ambiguity, riba and gambling, as has been explained in the answer to question number 8889

In the answer to question number 89805 we have quoted a fatwa of Shaykh ‘Abd al-‘Azeez ibn Baaz (may Allah have mercy on him), stating that it is not permissible to deal with riba for the purpose of paying taxes from the interest. 

And Allah knows best.

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