Zakat Guide

Comprehensive Zakat Guide

What is Zakat?

Zakat is the annual payment made by Muslims to support those most in need. It is one of the Five Pillars of Islam and is a key part of the Islamic faith. By donating a percentage of your wealth in order to help those less fortunate than yourself, you can please Allah (SWT) while supporting your brothers and sisters across the world.

Who is Eligible for Zakat?

There are two ways to answer this question - who is eligible to pay Zakat and who is eligible to receive Zakat.

As defined by the Zakat rules, those eligible to pay must be:

• Muslim
• Free
• Of sound mind
• Past the age of puberty
• Have positive cash or goods flow
• Have a total personal wealth higher than the Nisab value

In summary, any adult Muslim who is working or earning more than is necessary to fulfil their everyday essential needs is expected to pay a percentage of their wealth as Zakat.

Those who are eligible to pay Zakat follow the teachings of the Holy Qur'an (Chapter at-Tawbah Tevbe, 60) as:

“As-Sadaqat (Zakat) are only for the Fuqara' (poor), and Al-Masakin (the needy) and those employed to collect (Zakat funds); and for to attract the hearts of those who have been inclined (towards Islam); and to free the captives; and for those in debt; and for Allah's Cause (i.e. for Mujahidun - those fighting in the holy wars), and for the wayfarer (a traveller who is cut off from everything); a duty imposed by Allah. And Allah is All-Knowing, All-Wise.”

Those eligible to receive assistance from Zakat payments include:

• (Fakir) The poor who have no or low income
• (Miskin) The needy who do not have a days food
• (Amil) Those employed to distribute Zakat
• (Riqab) Anyone in slavery or captivity
• (Gharmin) Anyone in unmanageable debt
• (Fisabillillah) Anyone who fights for Allah (SWT)
• (Ibnus Sabil) To assist stranded or struggling travellers
• (Muallaf) Those new to the Muslim faith or friends of the Muslim community

We distribute your Zakat contributions to those in need, see here for how your Zakat donations help.

What is Nisab?

The term Nisab is defined as the threshold amount that a Muslims wealth should total to make them eligible to pay Zakat. There are two values used to calculate the Nisab threshold - gold and silver at the value of 612.36 grams of silver and 87.48 grams of gold. The monetary value is calculated on the current price of gold and silver when working out your Zakat contribution.

When talking about Nisab thresholds, you may also come across the term “Hawl” which is the term used to describe the lunar year, the Islamic year or 354 days. The payment of Zakat is expected to be made once every Hawl after your wealth has crossed the Nisab threshold and has remained above the threshold for a full Islamic year.

When Should I Pay Zakat?

Once your wealth has passed the Nisab threshold, you are eligible to pay Zakat. However, it is not paid straight away. Zakat should be paid after your wealth has been held for a full lunar year but only if the value remains above the minimum threshold amount.

Should your wealth increase or decrease, your Zakat amount should adjust accordingly, however, if your held assets fall below the Nisab threshold, you are no longer eligible to pay Zakat. The amount of Zakat due is calculated based on the value of personal wealth at the end of the Islamic year. Many Muslims choose to pay their Zakat during Ramadan as this offers greater blessing and reward, although you can pay your Zakat at any time of year.

When talking about Nisab thresholds, you may also come across the term “Hawl” which is the term used to describe the lunar year, the Islamic year or 354 days. The payment of Zakat is expected to be made once every Hawl after your wealth has crossed the Nisab threshold and has remained above the threshold for a full Islamic year.

How Much Zakat Do I Need to Pay?

Zakat is calculated on the following:

• 2.5% on annual savings and personal wealth
• 5% on farmer's assets where crops are irrigated out of the farmers pocket
• 10% on farmer's assets where crops are irrigated by rain
• 20% on precious resources found on your property within the lunar year, such as oil, gold and silver

Assets and personal wealth must fall above the Nisab threshold in order to be included in the calculation.