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 (see below) to help those less fortunate, as is mentioned in the Qur'anic verse below:
Take [O Prophet (saw)] from their wealth a charity in order to cleanse and purify them..
At Muslim Hands, most of our projects are Zakat eligible, and with your generosity, we will work to assist those who are most in need. Calculating the exact amount of Zakat owed can be a difficult task, especially when you come to consider any assets such as property and/or business shares. At Muslim Hands, we offer our Zakat calculator to help; simply input all your assets and it will automatically calculate the amount owed.
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 (via e-nisab.com).
WHAT IS ZAKAT DUE ON?
Zakat is due on any personal expendable wealth owned by a sane adult Muslim, including any wealth that is tied up in business assets and property. In these cases, the value of such assets is included and added to the value of any money in the bank and cash at home.
Here is the complete list of what Zakat is due on:
- Gold and silver (ornaments or jewellery)
- Cash held at home or in bank accounts
- Pensions
- Property owned for investment purposes
- Stocks and shares owned directly or through investment funds
- Money lent to others
- Business stock in trade and merchandise
- Agricultural produce
Any debt that is owed, however, is to be subtracted from the total wealth. Personal or business loans are not considered to be part of your wealth, thus making them ineligible for Zakat.
ZAKAT PERCENTAGE
Should your personal expendable wealth be above the nisab value, after taking away anything that is owed, you are required to pay 2.5% of this as Zakat. As an example, if your personal assets totalled £15,620 and you owed a total of £5,500, the amount of Zakat eligible wealth is £10,120 – therefore making your payable amount £253.
| Detail | Amount |
|---|---|
| Cash at Home/Bank | £2,000 |
| Gold & Silver | £1,200 |
| Property (Other Than Home) | £0 |
| Pensions | £10,000 |
| Shares | £400 |
| Other Investments | £1,000 |
| Money Owed to You | £20 |
| Business Value | £1,000 |
| Unpaid Debts | £1,500 |
| Business Debts | £4,000 |
| Total: | £15,620 |
| Total Liabilities: | £5,500 |
| Zakatable Amount: | £10,120 |
| Zakat Owed: | £253 |
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 via our donations page. 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.
Established in 1993, Muslim Hands is an aid agency and NGO helping those affected by poverty, conflict and natural disaster in over 20 countries worldwide.