As one of the pillars of Islam, zakat is a form of obligatory charity that has the potential to ease the suffering of millions.
📖 “And establish prayer and give Zakat, and whatever good you put forward for yourselves – you will find it with Allah.”
With the literal meaning of the word being ‘to cleanse,’ Muslims believe that paying zakat purifies, increases and blesses the remainder of their wealth.
📖 “Whoever pays the zakat on his wealth will have its evil removed from him” (Ibn Khuzaimah and at-Tabarani).
Zakat is also a spiritual connection to one’s maker – to purify your wealth for the will of Allah is to acknowledge that everything we own belongs to Him, and it is for Him that we strive to end poverty and help our brothers and sisters.
To be liable for zakat, one’s wealth must amount to more than a threshold figure, termed the “nisab.”
According to the Hanafi madhab, zakat is 2.5% of wealth that has been in one’s possession for a lunar year. If wealth amounts to less than a threshold figure, termed the nisab, then no zakat is payable. If wealth amounts to more than the nisab, zakat becomes obligatory.
📖 “Of their goods, take zakat, so that you might purify and sanctify them.”(9:103, Qur’an)
Calculating your Zakat isn’t as difficult as you may think. We find that breaking your assets down into different categories makes the Zakat calculation process really simple.
We have broken down the calculation process into Zakatable assets (gold, silver, cash, savings, business assets etc.) and Deductible liabilities (money you owe, other outgoings due) so you can calculate the Zakat you owe easily.
The amount of Zakat you need to pay will be determined once you have calculated the value of your net assets. You then need to see whether your net assets are equal to, or exceed, the Nisab threshold.
To determine the nisab, the are two measures: either gold or silver.
Gold: The nisab by the gold standard is 3 ounces of gold (87.48 grammes) or its cash equivalent. This is approximately $4,780.06 for gold on 08 March 2021, but will vary with the market value of gold.
Silver: The nisab by the silver standard is 21 ounces of silver (612.36 grammes) or its equivalent in cash. This is approximately $503.10 on 08 March 2021.
Example: In 1423 AH, Suraya’s zakatable wealth came to only £200. She owes no zakat. The next year was better for her, and she now owns £2,500 in zakatable wealth. She will be liable for zakat after the money has been in her possession for a lunar year.
Should I use the gold or silver nisab?
The nisab calculated with the silver standard is significantly lower than its gold counterpart. This is because the value of silver has plummeted since the time of the Prophet (peace be upon him).
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.
My wealth decreased below the nisab for a few months during the year, do I still pay zakat?
As long as you are in possession of wealth above the nisab threshold at the beginning and end of the zakat year, zakat will be payable, even if your wealth dipped below the nisab for most of the year.
I have more money than the nisab, but I need it for my living expenses.
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, his remaining wealth is less than the nisab then no zakat is payable.
When does the zakat year begin?
The zakat year begins on the date on which you were first in possessions 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.
As one of the pillars of Islam, zakat is a form of obligatory charity that has the potential to ease the suffering of millions.
📖 “And establish prayer and give Zakat, and whatever good you put forward for yourselves – you will find it with Allah.”
With the literal meaning of the word being ‘to cleanse,’ Muslims believe that paying zakat purifies, increases and blesses the remainder of their wealth.
📖 “Whoever pays the zakat on his wealth will have its evil removed from him” (Ibn Khuzaimah and at-Tabarani).
Zakat is also a spiritual connection to one’s maker – to purify your wealth for the will of Allah is to acknowledge that everything we own belongs to Him, and it is for Him that we strive to end poverty and help our brothers and sisters.
To be liable for zakat, one’s wealth must amount to more than a threshold figure, termed the “nisab.”
According to the Hanafi madhab, zakat is 2.5% of wealth that has been in one’s possession for a lunar year. If wealth amounts to less than a threshold figure, termed the nisab, then no zakat is payable. If wealth amounts to more than the nisab, zakat becomes obligatory.
📖 “Of their goods, take zakat, so that you might purify and sanctify them.”(9:103, Qur’an)
Calculating your Zakat isn’t as difficult as you may think. We find that breaking your assets down into different categories makes the Zakat calculation process really simple.
We have broken down the calculation process into Zakatable assets (gold, silver, cash, savings, business assets etc.) and Deductible liabilities (money you owe, other outgoings due) so you can calculate the Zakat you owe easily.
The amount of Zakat you need to pay will be determined once you have calculated the value of your net assets. You then need to see whether your net assets are equal to, or exceed, the Nisab threshold.
To determine the nisab, the are two measures: either gold or silver.
Gold: The nisab by the gold standard is 3 ounces of gold (87.48 grammes) or its cash equivalent. This is approximately $4,780.06 for gold on 08 March 2021, but will vary with the market value of gold.
Silver: The nisab by the silver standard is 21 ounces of silver (612.36 grammes) or its equivalent in cash. This is approximately $503.10 on 08 March 2021.
Example: In 1423 AH, Suraya’s zakatable wealth came to only £200. She owes no zakat. The next year was better for her, and she now owns £2,500 in zakatable wealth. She will be liable for zakat after the money has been in her possession for a lunar year.
Should I use the gold or silver nisab?
The nisab calculated with the silver standard is significantly lower than its gold counterpart. This is because the value of silver has plummeted since the time of the Prophet (peace be upon him).
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.
My wealth decreased below the nisab for a few months during the year, do I still pay zakat?
As long as you are in possession of wealth above the nisab threshold at the beginning and end of the zakat year, zakat will be payable, even if your wealth dipped below the nisab for most of the year.
I have more money than the nisab, but I need it for my living expenses.
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, his remaining wealth is less than the nisab then no zakat is payable.
When does the zakat year begin?
The zakat year begins on the date on which you were first in possessions 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.
