Zakat
What is Zakat?
Zakat (zakaat, zakah), or almsgiving, is one of the five pillars of Islam. This means that Zakat is mandatory for Muslims, along with the other four sacred pillars of Islam. For every sane, adult Muslim who owns wealth over a certain amount – known as the Nisab – he or she must pay 2.5% of that wealth as Zakat.
Eligible Muslims pay Zakat once a year, and it is due as soon as one lunar (Islamic) year has passed since meeting or exceeding the Nisab (certain amount of wealth). The Zakat of every Muslim is then distributed to those who meet the criteria to receive it.
…and those in whose wealth there is a recognised right, for the needy and deprived.
Qur’an | 70:24-5
What is Nisab?
The Nisab is the minimum amount of wealth a Muslim must possess before they become liable to pay Zakat. This amount is often referred to as the Nisab threshold.
Gold and silver are the two values used to calculate the Nisab threshold. The Nisab is the value of 87.48 grams of gold or 612.36 grams of silver.
A sacred pillar of Islam
Zakat is not just a fundamental pillar of Islam, it is also a revolutionary concept which can end extreme poverty – that is the power of Zakat!
And be steadfast in prayer and regular in charity: And whatever good you send forth for your souls before you, you shall find it with Allah.
Qur’an | 2:110
It is also a right that the poor have over us.
Those in whose wealth there is a recognised right for the needy and the poor.
Qur’an | 70:24-25
Picture this: if just the ten richest people in the world paid 2.5% of their eligible wealth – that would be a staggering £7.7 billion! The power of that money in tackling poverty would be huge.
How much is Zakat?
Your Zakat donation should amount to 2.5% of your total Zakat eligible wealth. Therefore, if your total assets (after any debts owed) amounted to £10,000, you would pay £250.
What are 2 types of Zakat?
The two main types are:
Zakat Al-Mal, is translated to ‘the Zakat of wealth’ and is commonly referred to as Zakat. It refers to the pillar of Islam stating that every sane, adult Muslim who owns wealth over a certain amount – known as the Nisab, must pay 2.5% of that wealth.
Fitrana or, Zakat al-Fitr, is a charitable donation of food that must be given before Eid prayer, before the end of the month of Ramadan, for the love of Allah.
What is Fitrana?
Fitrana is a donation often in the form of food that is given before Eid prayer, therefore it must be given before the end of Ramadan. Fitrana must be given by every self-supporting Muslim who has food in excess of their needs, on behalf of themselves and their dependants.
Fitrana differs from the annual Zakat in that the amount paid is not dependent on one’s earnings. As long as one has food in excess of their needs, they must pay a fixed amount (£5 in the UK).
Fitrana is a duty for everyone in the household. Therefore, the head of the household, or parents and guardians, should pay on behalf of other members of the family if they cannot do so. However, Zakat only needs to be paid by the person who has wealth over a certain amount – known as the Nisab.
Fitrana must be paid within the month of Ramadan. The latest it can be paid is before the Eid prayer begins so that those in need can benefit in time for Eid. However, the annual Zakat can be paid at any time during the year.
What are the conditions of paying Zakat?
The four conditions are:
- One must be an adult Muslim to be eligible to pay Zakat, according to the Hanafi Madhab. However, according to other scholars, children too may be required to have their Zakat calculated if their personal Zakatable wealth reaches the nisab.
- One must be of sane mind, according to the Hanafi madhab
- The person eligible to pay must have been in ownership of the nisab (minimum amount of wealth) for one lunar year before paying Zakat on their surplus wealth.
- One must be free, meaning Zakat is not payable by slaves.
What happens if you don’t pay Zakat?
As Zakat is one of the five pillars of Islam, a fundamental tenet of the religion, there are serious consequences for not paying it if you are eligible to do so. As well as facing punishment in the next life, withholding Zakat can also lead to a lack of barakah (blessings) in your wealth and life.
The severity of not paying Zakat is mentioned many times in the Quran and Hadith. For example:
Those who hoard up treasures of gold and silver and spend them not in the way of Allah; give them the news of a painful punishment, on the Day when that (wealth) will be heated in the Fire of Hell and with it will be branded their forehead, their sides, and their backs, (and it will be said to them:) ‘This is the treasure which you hoarded for yourselves. Now taste of what you used to hoard.
Qur’an | 9:34-35
Whoever is made wealthy by Allah and does not pay the Zakat of his wealth, then on the Day of Resurrection his wealth will be made like a bald-headed poisonous male snake with two black spots over the eyes. The snake will encircle his neck and bite his cheeks and say, ‘I am your wealth, I am your treasure.
(Hadith | Bukhari)
Is Zakat on income or savings?
Zakat is based on the amount, assets and wealth you own, as opposed to your income.
According to the Hanafis, for every sane, adult Muslim who owns wealth over a certain amount – known as the Nisab – he or she must pay 2.5% of that wealth as Zakat.
Assets include gold, silver, cash, savings and business assets, which have been in your possession over a lunar year.
Who are the 8 recipients of Zakat?
There are eight categories of people who are eligible to receive Zakat, these are:
- The poor
- The needy
- Administrators of Zakat
- Those who have a reconciliation of heart (those who have embraced Islam or are inclined to it).
- Those who have been enslaved
- Those in debt
- In the cause of God
- Travellers (including refugees)
A poor person is someone whose property, in excess of his basic requirements, does not reach the Nisab threshold.
Who is not eligible for receiving Zakat?
Zakat must be paid and received by Muslims. Therefore, unlike Sadaqah, non-Muslims cannot receive Zakat donations.
Those who are wealthy cannot receive Zakat.
The family of the Prophet Muhammad (Ahlul Bayt descendants from Banu Hashim and Banu Muttalib) are not allowed to receive Zakat or Sadaqah donations.
Can you give Zakat to a family member?
Yes you can give Zakat to a relative, but you cannot give it to your immediate family. This includes your spouse, children, and parents i.e. all the descendants and ascendants, if you subscribe to the Hanafi and Hanbali schools of jurisprudence. However, in the Shafi and Maliki schools, this may be allowed in some scenarios.
General Zakat Questions
Does the non-muslim have to pay Zakat?
No, it is only prescribed for Muslims.
Who is eligible to receive Zakat?
There are eight categories of people who are eligible:
- The poor
- The needy
- Administrators of Zakat
- Those whose hearts have been recently reconciled
- Those who have been enslaved
- Those in debt
- In the cause of God
- Travellers (including refugees)
A poor person is someone whose property, in excess of his basic requirements, does not reach the nisab threshold. The recipient must not belong to your immediate family, therefore; your spouse, children, parents and grandparents cannot receive your Zakat. Other relatives, however, can receive it.
I owe several years of Zakat, how do I pay?
For every year that you owe Zakat, take 2.5% from the total wealth you had at the end of that year and pay that in Zakat. If you are not sure how much wealth you had, you must estimate it to the best of your ability. For example, if you have not paid Zakat for the last 5 years, you need to work out how much wealth you owned every Ramadan for the last 5 years and pay 2.5% of that.
Miscellaneous Questions
I normally give a lot of money in charity throughout the year, do I still have to pay Zakat?
You must pay with the intention of paying it. Therefore, it is important that you make an intention to give a donation as a Zakat payment.
I paid Zakat on $4,000 last Ramadan. This year I have a total of $10,000 of wealth liable to Zakat. What value do I take the 2.5% from as I paid for the $4,000 last year?
It is to be paid on the total savings regardless of what was paid on it in the past. Therefore, you would pay 2.5% of $10,000, which is $250.
Miscellaneous Questions: Saving and Jewellery
If a child's wealth has satisfied all the conditions of Zakat, should Zakat be paid on it?
The majority of the scholars from the past favoured the opinion that it should be paid. This is the same for both the child and the insane person. Therefore, their guardian should take the Zakat from the person’s wealth and pay it on their behalf. However, some opinion suggest that it is not due on children and insane people, so please discuss with a scholar.
I have mixed jewellery consisting of gold, silver and precious stones. How do I calculate the value on which Zakat must be paid?
The best way for you to do this would be to take the jewellery to a jeweller and ask them to value just the gold and silver parts of the jewellery. The valuations they give will be the total on which you have to pay. Precious stones are not liable for Zakat.
I have saving which I shall use to go for Hajj, is this to be included in my wealth when calculating Zakat?
Yes, it must be included.
Miscellaneous Questions: Debt
I lent some money to a friend who informed me that s/he is able to return the money; do I have to include this in my wealth when calculating Zakat?
Yes, as it is as if they are just storing your money.
10 years ago I lent some money to a friend who is poor and I did not expect to get the money back. They have now paid me back, is this money liable for Zakat?
If the money is paid back, then it is liable for Zakat (provided the lender meet other criteria for paying Zakat). However, if the money is not paid back, then the intention for lending would need to be reviewed. If the lender was fairly sure that they were not going to receive it back and they are unable to refer it to a judiciary, then in such cases it is usually not payable. However, there are many variables and hence this question should be referred to a scholar.
My Zakat is due in Dhul Qa'dah but I would like to pay in advance (in Ramadan). Can this be deducted from my wealth when calculating Zakat?
The general answer would be yes, however we would strongly urge you to consult a scholar about this.
Miscellaneous Questions: Business and Property
I brought a house with the purpose of renting 5 years ago. Last year I decided that I would sell the house. How do I pay Zakat on this?
For the time that you were renting the house out and did not have the intention of selling, you do not pay Zakat on the house. But you would still have to pay it on the rent you earned just like any other wealth you have. You must include it in Zakatable assets from the day you made the intention to sell the house. You must also pay it on the selling price of the house. However, if you are paying in advance, you would need to estimate this. You would need to do the same for every year after that in which the house is still for sale. But to be absolutely clear, please discuss this with a scholar.
I have a shop where I sell clothes. How do I pay Zakat?
Every year at the time of paying, you would need to calculate the total bulk selling price for all the goods for sale in your shop. E.g. All the clothes for sale in your shop add up to a total selling value of a particular sum of money. You would add this to your other eligible wealth when calculating your total payment.
