Islamic banking signifies to a system of modern banking which is very popular in new world. At present era it has become very hot topic in western marketplace especially among Muslim community in UK. About 2 million Muslims have acquired their code of life according to their philosophy, rules and ethics from Sunnat, Holly, and Quran. Islamic banking system follows Shariah law or Shariah compliant and it on work four principles such as Haram refers to avoid certain transaction, Gharar refers to avoid speculation activities, Riba refers to interest free banking system and Zakat refers to different tax system. Muslim community is promoting well financial condition of the United Kingdom and that is the reason government of UK more appreciate of this Muslim banking sector. As Muslim community is growing rapidly in UK where Shariah law is completely followed by Islamic bank on the other hand investment services are delivering according to rules and ethics of Shariah law between the two banking system. This requires a high degree of innovation like as a range of new products for customers that is the reason this field is extremely dynamic. This banking got more popularity due to its interest free nature of this banking system because riba is strictly banned in Islam because interest charges always lead to credit crises and most of the countries facing same problem due to taking interest. In UK Islamic banking system achieved outstanding popularity and growth due to growing population of Muslim community and bank policies which offers appropriate financial solutions and are more ethical to the common public. The implementations of these banking rules are titled for facing the barriers from common public and conventional banking financial policies. Here a lot of obstacles in the implementation of this banking in western states because of several rules of Shariah compliant, besides this there are several reasons which create problem like as FSA and English Government. Right now Muslim financial system is at initial position so it can take few time to get success, growth and development economically on large scale in the England and across European countries.