How to calculate Zakat
Zakat is the third Pillar of Islam and is one of the most important and commendable acts that any adult Muslim could hope to perform. The word Zakat itself has the meaning of purification and increase. Allah has made it obligatory on every sane, adult Muslim who has complete ownership of the nisab to help those less fortunate.
Zakat is typically calculated as 2.5% of qualifying savings and assets, including cash, gold, silver and certain investments. This page explains how to calculate Zakat and includes a simple Zakat calculator to help you determine the amount due.
Take [O Prophet (saw)] from their wealth a charity in order to cleanse and purify them..
The Noble Qur’an 9:103
Zakat Nisab
In order to qualify to pay Zakat, you must first meet the mimimum Zakat nisab (threshold). Your expendable wealth should be at least the value of 87.48 grams of gold or 612.36 grams of silver, and your wealth should have remained above the nisab value for one Islamic (lunar) year, referred to as Hawl. Many Muslims opt to pay their Zakat during the Blessed month of Ramadan, but Zakat can be paid at any time of the year.
As the value of gold and silver constantly change, so too does the value of nisab. This is why we showcase the live nisab value on our Zakat calculator
What is Zakat due on?
Any debt that is owed is to be subtracted from the total wealth outlined below. Personal or business loans are not considered to be part of your wealth, thus making them ineligible for Zakat.
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Gold and silver (ornaments or jewellery)
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Cash held at home or in bank accounts
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Pensions
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Property owned for investment purposes
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Stocks and shares owned directly or through investment funds
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Money lent to others
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Business stock in trade and merchandise
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Agricultural produce
Example Zakat Calculation
If a person has:
- £5,000 in savings
- £1,000 in gold
- £500 in investments
Total Zakatable wealth = £6,500
Zakat due = 2.5% of £6,500 = £162.50
You can use our Zakat calculator below to determine the amount of Zakat due based on your own savings and assets.
Common questions about how to calculate Zakat
Do I pay Zakat on my savings?
Yes. Zakat is due on cash savings and money held in bank accounts once your total wealth exceeds the nisab threshold for one lunar year. This includes money in current accounts, savings accounts and cash you hold. If your total qualifying wealth remains above the nisab for a full lunar year, you usually pay 2.5% of that amount as Zakat.
Do I need to pay Zakat on gold and silver?
Gold and silver are Zakatable assets and should be included when calculating your Zakat. This includes jewellery, coins and bullion that you own. If the total value of your Zakatable wealth — including gold, silver, savings and investments — exceeds the nisab threshold, you generally pay 2.5% of the total value. Our calculator is updated daily with the current nisab value.
Do debts affect my Zakat calculation?
Certain short-term debts may be deducted before calculating Zakat. Short-term debts that must be repaid soon, such as outstanding bills or repayments due, may reduce the amount of Zakatable wealth you have. After deducting eligible liabilities, you calculate Zakat on the remaining qualifying assets if they still exceed the nisab threshold.
Do I pay Zakat on my salary or income?
Zakat is not paid on income itself, but on the wealth that remains after living expenses. If money from your salary has been saved and remains above the nisab threshold for one lunar year, it becomes part of your Zakatable wealth and may be subject to 2.5% Zakat.
Do I pay Zakat on my house?
You do not pay Zakat on the home you live in. Zakat is generally due on savings, gold, silver, investments and certain business assets once your wealth exceeds the nisab threshold for one lunar year. However, if you own property specifically for investment or resale, it may be considered when calculating your Zakat depending on its purpose.
Do I pay Zakat on my pension?
In many cases, pensions may be subject to Zakat depending on the type of pension and whether you have access to the funds. Some scholars consider accessible pension savings to be part of your Zakatable wealth, while others suggest paying Zakat once funds are withdrawn. If you are unsure, it may be helpful to seek scholarly guidance based on your circumstances.
Do I pay Zakat on shares or investments?
Shares and investments may be Zakatable depending on their purpose and value. If shares are held as an investment, many scholars advise paying Zakat on their market value or on the proportion of underlying Zakatable assets. If shares are held for trading, they may be treated similarly to trade goods when calculating Zakat.
Zakat and Tax in the UK
If you are self-employed or own a business, then you will be responsible for filing your own tax returns to HMRC. This could potentially mean that you have cash in the bank that has been set aside for tax returns – this total would be deducted as this is money owed and the liability is known.
If you are self-employed or own a business, then you will be responsible for filing your own tax returns to HMRC. This could potentially mean that you have cash in the bank that has been set aside for tax returns – this total would be deducted as this is money owed and the liability is known.
To put it simply, unpaid tax from the previous financial year can be deducted from your Zakatable amount, while future bills cannot be deducted as payment is not yet due.
Can I pay my Zakat today?
Yes! You can calculate and pay your Zakat online with Muslim Hands today. Your payment will be passed on to our Zakat Fund, where it will be distributed to where it is most needed.
Alternatively, if you already know the amount of Zakat you are due to pay, you can pay the amount directly. To do so, simply select Zakat from the drop-down menu and enter the amount you wish to pay. If desired, you can opt to pay your Zakat in monthly instalments by dividing the amount payable by 12 and setting up a regular monthly donation for that amount.
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