Zakat - The Fair Distribution of Wealth and Income
By assigning 2.5% of surplus wealth(Nisab Value) annually to the poor and impoverished, with the objective of lifting them into the ranks of the wealthy, not in the sense of gaudy opulence but in Islam’s meaning of well-sufficed in provision and the essential needs for a good life, Zakat reduces the wealth gap now tearing apart not only our societies but our world.
Zakah Nisab/Mahr
- Silver Nisaab: £370.18
- Gold Nisaab: £4066.07
- 1 Gold Tola: £593.27
- Mahr Azwaaj: £925.64
- Mahr Fatimi: £888.58
- Minimum Mahr: £18.43
*** Values as off 03/03/2022.
Please note: Zakat calculation and Nisab value used here are for general guideline only. For specific details and complex issue please consult to an Islamic scholar
FAQ
Most frequent questions and answers related to Zakah
In simplest term ‘nisab, means threshold. To be liable for zakat, one’s wealth must be more than a threshold figure, termed the ‘nisab’. To determine the nisab there are two measures, either gold or silver. The nisab by the gold standard is 3 ounces of gold (87.48 grammes) or its cash equivalent. The nisab by the silver standard is 21 ounces of silver (612.36 grammes) or its equivalent in cash.
Should I use the gold or silver nisab?
There are arguments for using either nisab value – many scholars say that it is better to use the silver nisab since it will increase the amount of charity distributed, others say that the gold nisab is closer to the nisab in use at the time of the blessed Prophet (peace be upon him).
However, if your assets consist entirely of gold, you must use the gold nisab, and similarly, if they consist entirely of silver then the silver nisab must be used.
When calculating zakat we should are all of the following as cash or its equivalent items should take into account, Cash at home, in bank accounts, savings, money lent to others, saving certificates, bonds, shares, investment certificates and so on, Gold and silver: Any gold or silver you possess is Zakatable, including jewellery according to the Hanafi school, because these two metals have intrinsic monetary value.
Other precious metals and stones are not Zakatable unless they were acquired for the purpose of trade.
Stock purchased for trade: Any goods you have bought with the intention of selling are included in your Zakatable wealth.
Except for gold and silver, no zakat is payable on your personal belongings such as a house, car or any goods which were not purchased to trade.
If a person possesses wealth exceeding the nisab threshold, but has to pay rent, purchase food, clothing, etc., for themselves and their dependants, then these costs may be deducted from one’s wealth.
If, after deducting these costs, the remaining amount is less than the nisab then no zakat is payable.
The zakat year begins on the date you were first in possession of wealth above the nisab.
This will be your seed date, whenever it comes around you will have to calculate zakat, irrespective of any fluctuations in the amount of wealth in your possession.
The only situation in which your seed date will change is if you were to become totally bankrupt and lose all your assets and belongings. In this situation, your new seed date will begin when you are once again in possession of wealth above the nisab.
If you are not sure of your seed date, then estimate it to the best of your ability.
If, after deducting these costs, the remaining amount is less than the nisab then no zakat is payable.
As long as you are in possession of wealth above the nisab threshold at the beginning and end of the zakat year, then zakat will be due, even if your wealth dipped below the nisab for some or most of the year.
If, after deducting these costs, the remaining amount is less than the nisab then no zakat is payable.
You pay zakat when the zakat year has elapsed, irrespective of when particular portions of your wealth came into your possession. Even if the cash came into your possession a day before the zakat year had elapsed, you would have to pay zakat on it the following day.
If, after deducting these costs, the remaining amount is less than the nisab then no zakat is payable.
The basic principle is that debts are deducted from wealth, and if the remainder is still over the nisab threshold, zakat is payable, otherwise not.
However, if a person has a large debt that is being paid off in instalments, such as a mortgage or a large credit card debt, then one should only deduct the payment that is currently due from one’s assets.
If, after deducting these costs, the remaining amount is less than the nisab then no zakat is payable.
If you have a business, all stock in trade is liable for zakat, including land and real estate that has been bought for the purpose of resale.
Raw materials and goods produced for sale are also subject to zakat. The buildings, machinery, vehicles and so on that are essential for the business are exempt from zakat.
How do I calculate the value of stock in my shop?
However, if a person has a large debt that is being paid off in instalments, such as a mortgage or a large credit card debt, then one should only deduct the payment that is currently due from one’s assets.
If, after deducting these costs, the remaining amount is less than the nisab then no zakat is payable.
The value of the stock in your shop is its market value, not the buying price. You can calculate this by estimating how much you would expect to receive if you sold the entire stock at once to a single buyer.
Yes, you would need to pay zakat on it. Although when calculating its value, you would consider the price that you would be able to sell it for.
A loan you have taken out to acquire zakatable assets, such as raw materials, goods and so on, can be deducted from your capital. You pay zakat on what remains.
A loan you have taken out to acquire non-zakatable assets, such as furniture, machinery and buildings is not deductible.
Zakat is obligatory on someone who is:
- A free man or woman.
- Muslim: Zakat is a religious obligation upon Muslims, like the five daily prayers.
- Sane: The person on whom zakat becomes obligatory must be of sound mind according to Imam Abu Hanifa. Imam Malik holds that an insane person is still liable for zakat.
- An adult: Children do not have to pay zakat, even if they own enough wealth to make zakat obligatory. However, both Imam Shafi’i and Imam Malik say that the guardians of the children should pay the zakat on their behalf.
- In complete ownership and control of their wealth: The person must own and be in possession of the wealth, and also be free to spend or dispose of the wealth in any manner they like. If a person has made a loan of their wealth then they are not in a position to spend it until it is repaid.
- In possession of wealth above the nisab threshold: The person should possess wealth above a defined amount required to satisfy the essential needs of themselves and their dependents (nisab).
- Free from debt: Someone in debt may deduct their debts from their assets. If what remains is still above the nisab threshold, zakat is due, otherwise not.
- In possession of the wealth for one complete lunar (Hijrah) year: If one owns zakatable wealth for a lunar year, zakat will become obligatory, provided the total amount of wealth exceeds the nisab at the beginning of the year and the end, irrespective of any fluctuations in the months between.
Yes, zakat can be paid in advance before the year has ended, but you should make sure you have wealth equal to or above the nisab.
To be eligible to receive zakat, the recipient must be a poor Muslim. A poor person is someone whose property in excess of his basic requirements does not reach the value of the nisab threshold.
The recipient must not belong to your immediate family: your spouse, children, parents and grandparents cannot receive your zakat. Other relatives however, can receive your zakat.
The recipient must not be a Hashimi, a descendant of the Prophet (peace be upon him).
