Sheikh Ahmad Kutty, a senior lecturer and Islamic scholar at the Islamic Institute of Toronto, Ontario, Canada, who states: “Washing the hands — nails included — with water is an essential integral part (fard) of wudu’, which means that wudu’ is not valid without it; washing is incomplete unless water comes in direct contact with the skin and fingernails. Nail polish, paint, etc. have a thick layer that prevents water reaching your skin. It is, therefore, a must to remove that layer before making wudu’. Henna (or hair dye), however, is different from nail polish since it has no visible layer but only color. So it does not affect the validity of wudu’.
What is stated above is the generally accepted view of all of the Schools of Jurisprudence. Exceptions to this rule are made only when use of water becomes harmful because of a health condition or sickness. The analogy of wiping hands with wiping on socks or stockings is not valid; there is precedent to allow wiping on socks or stockings in the Shari`ah, while no such precedent exists as regards wiping of hands in normal circumstances.”