Zakat, or almsgiving, is one of the five pillars of Islam, along with prayer, fasting, pilgrimage (Hajj) and belief in Allah (SWT) and His Messenger, Prophet Muhammad (SAW). 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.
“…and those in whose wealth there is a recognised right, for the needy and deprived” (Qur’an 70:24-5)
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The nisab is the minimum amount of wealth a Muslim must possess before they become eligible 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.
Nisab Value (as of 08/03/2021):
Using value of silver (612.36 grams) – approximately €422.13
Using value of gold (87.48 grams) – approximately €4,012.35
Zakat is not just a fundamental pillar of Islam. It is also a revolutionary concept with the potential to ease the suffering of millions around the world.
As Allah (SWT) tells us in the Holy Qur’an:
“And be steadfast in prayer and regular in charity: And whatever good ye send forth for your souls before you, ye shall find it with Allah” (Qur’an 2:110)
It is also a right that the poor have over us as for
“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 Zakat – that would be a staggering £7.7 billion! The power of that money in tackling poverty would be huge.
At Islamic Relief, we use your Zakat in the most effective way possible to relieve the suffering of the world’s most vulnerable people.
Your Zakat has funded some of our crucial work with people and communities living in disaster and war zones: drought and famine-struck countries across East Africa and communities affected by conflict in Yemen. Your generosity has enabled communities to build sustainable livelihoods in the face of climate change, and enabled better lives for vulnerable orphans and families across the globe.
Alhamdulillah, you have the power to transform people’s lives.
Your Zakat donation should amount to 2.5% of your total wealth. Therefore, if your total assets (after any debts owed) amounted to €10,000, you would pay €250.
There are eight categories of people who are eligible to receive Zakat.
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 your zakat.
Every Muslim, sane adult, in possession of the nisab (the minimum amount of wealth that one must have before zakat is payable) for one whole year is liable to pay the zakat. See the current monetary nisab value above
Items from which wealth can be derived include: cattle, crops, gold, silver, and merchandise for business. Zakat must be paid on cash deposits held in bank accounts.
For personal items that one cannot derive wealth from, such as cars, clothing, shelter, furniture and which are not to be used for trade, are not included when calculating zakat.
One must not only have the minimum amount of nisab but it must have been in one’s possession for one whole year. Ramadan is chosen by many as the month in which they pay their zakat; both to remember it, and also because the reward for good deeds done in this blessed month is multiplied.
According to the Hanafi madhab, all Gold and Silver you own, must be included as part of your Assets in the Zakat calculation.
However, in the Shafi madhab, any Gold and Silver that is for personal use, does not need to be included as part of your Assets.
If all of your wealth is in Gold, the value of the Gold you own must be at or above the Gold Nisab, to be eligible to pay Zakat.
If your wealth is a mixture of Gold and/or Silver and cash, it is ideal to use the Silver Nisab threshold.
If you possess Shares for the purposes of trading. Then you must include the value of the shares in your Assets.
However, if the Shares you possess are not for trading, but rather held as an investment, to deliver dividends, then it is only the dividends that need to be counted in your Assets.
The same rule applies to property trading. If a property is purchased with an intention to resell it, then the value of it must be counted in your Assets.
However, if a property is bought as an investment [to be let out], with the only benefit being the rental income, it is the profit [in the bank] that is eligible to be counted under your Assets.
Business stock has to be counted as an Asset for Zakat purposes. The value to be used is what would appear on your Balance Sheet. Usually, it is the cost of purchasing the stock.
Business premises doe not need to be counted as an Asset in the calculation. Any property the business owns [land, retail units, etc.] also don’t need to be counted as Assets.
A long term mortgage is not to be counted as a Liability in your Zakat calculation.
Loans that are taken out for a Personal purpose, can be subtracted as a Liability in the Zakat calculation.