What is Zakat?
Zakat is generally 2.5% of surplus wealth that you have possessed for a full lunar year.
In simple terms, you could define surplus wealth as any wealth that is over and above the necessary expenses that you and your family dependants need in order to live your normal day-to-day lives.
At the end of this leaflet, there is a simple table that can help you to work out your surplus wealth at any given point in time.
• Zakat is a most beautiful concept and a gift to us from Allah.
• It has the meaning of purification – for you and for your wealth.
• And it is one of the obligations in Islam that helps us get to paradise, Insha’Allah.
The next stage is to work out your start and stop dates for paying your Zakat.
You need the start & stop dates because in order for wealth to be liable for Zakat, it needs to have been in your possession for a full lunar year. A lunar (moon) year is about 10 or 11 days shorter than a solar (sun), year.
Most people just have a fixed time every year when they calculate their Zakat from one year to the next – and many choose Ramadan, for example.
This is ok as a general rule but if you receive a lot of money or jewellery at some point in the middle of a year, you may need to begin a new start & stop point for calculating your Zakat.
It might be, for example, calculate your Zakat from one Ramadan to the next.
You could then receive a large sum of money six months after Ramadan.
When the next Ramadan comes along, you will have had this large sum of money only for six months – not a full lunar year.
If you wait to pay until the Ramadan after that, you will have had the large sum of money by that time for 18 months. This would be wrong because you should have paid Zakat on it after 12 months.
Therefore, you should really have started a new Zakat year for this large sum of money from when it was received.
And, you should pay Zakat on it a full 12 (lunar) months later.
In this way, you could have more than one Zakat year running at the same time
By now you should have:
- Established the month on which you wish to calculate and pay your Zakat; i.e. the start & stop dates for your Zakat year
- Used our table or something similar to calculate the amount of wealth liable for Zakat that you have held for a full lunar year
Now you need to compare this amount of wealth to what is called the ‘Nisab’ – which is a threshold of wealth above which you need to pay your Zakat.
The Nisab can be 595 grams of silver - or their monetary equivalents. If it is expressed in money, therefore, the amount will change every year according to how much a gram of silver is worth. Currently this is about £150.
Islamic Relief has spoken to scholars from different Muslim communities, and it has been agreed that in the West, we can use the value of silver to calculate our zakat rather than gold.
With gold prices so high, opportunities to purify our wealth using the value of gold have been reduced. The scholars have therefore allowed silver to be used, so that Muslims can still purify their wealth as per Allah’s command in the Qur’an.
An Example: You have started your Zakat year in Ramadan 2008.
In Ramadan 2009, you use our table to work out that the surplus wealth you have had for a full lunar year - is £1,500.
At that time you check what the Nisab is and find out that the nisab based on the value of gold is £1,200; and based on the value of silver the nisab is £900. (Nowadays, silver is usually lower than the gold Nisab).
Therefore, you can now see that your surplus wealth of £1,500 is £300 over the gold Nisab and £600 over the silver Nisab. This means that you are eligible to pay zakat – alhamdulillah!
Remember though that your zakat is calculated on your total excess wealth, not on the difference between nisab and total excess wealth. The nisab is used only to indicate whether you are eligible to pay zakat.
You must now pay 2.5% on the total amount of your surplus wealth which is 2.5% of £1,500 which is £37.50. This £37.50 is your Zakat for the year. It will purify your wealth and bless you with Allah, insha’Allah.
Calculating Zakat is not always that easy. There are many rules and differences amongst scholars about exactly what is what regarding Zakat.
Some Muslims may use this as an excuse for not paying at all by saying, “It’s all too confusing and complicated for me”.
Others may try and use the different rules to try and pay as little as possible.
At the end of the day, it is up to you and you alone. It is your future that is at stake and more than anything else, Allah, subhana wa ta’la, wants good intentions behind any of our actions.
Therefore, it is not of most importance that you get every single rule right in every detail. Far more important is that you make a sincere intention to please Allah by paying as much Zakat as is expected of you – and according to the best information & knowledge you have acquired.
Islamic Relief can ensure that your Zakat is distributed in strict accordance to the principles of Islam.
We can also reach places that you may not be able to reach and access the desperately poor and needy.
And, together, these are some of the reasons why it is often a good idea to give pay your Zakat through a trusted charity like Islamic Relief.
Call our new Zakat Helpline for all your Zakat needs.
Tel: 0800 520 00 00
As noted earlier, Zakat has many rulings so for anything especially complicated - or to be sure about something you have read - you should go to a trusted imam or scholar with your queries.
Do I include loans on my surplus wealth calculation?
Yes – if you expect to receive the loan back, then you should include it.
Should I deduct my debts from my surplus wealth calculation?
You should calculate how much debt you expect to pay off in the coming lunar year (including a mortgage) and then you can deduct that amount from your surplus wealth calculations. Paying off a debt takes priority over Zakat.
Should I include jewellery?
No – if the jewellery is for personal use, then it should not be included. If it is for trading or investment purposes, then it should be included as part of your wealth calculations.
Can I make up for lost years when I didn’t pay Zakat?
Yes – you should work out how much you owed for each year you lost.
Doesn’t my other charity money count towards Zakat?
No – to pay Zakat you must first make the intention specifically for Zakat and then you must observe the rules of time, surplus wealth, and nisab.
How do I calculate Zakat on my business?
This can be complicated, but the basic rule is that your fixed assets are not liable for Zakat but all other assets should be included in your surplus wealth calculation.
Do I include stocks and shares?
Yes – you should calculate their monetary value at the time and include that as part of your wealth. (If the company for which you have stocks says that 50% of its value is in fixed assets, for example, then you could include only 50% of your share value in your wealth calculations if you wish).
Do I pay Zakat for my children?
No – not unless they have their own wealth, in which case they have an option to pay or not to pay Zakat - while they are still only children (i.e., up to puberty).
Who can receive my Zakat?
There are many categories given in the Quran (see Surat at Taubah 9:60). Basically, Zakat is for the poor – who are often defined as those who have wealth which is less than the annual Nisab threshold.