Islam Limericks and Wisdom

Zakat Calculation

Written by Kashif Hussain

Zakat Calculator (Hanafi fiqh)

Many people seem to misunderstand this pillar of Islam, either because of the numbers involved or simply because it is not taught anymore. This comprehensive guide will help you work out whether Zakat is fardh upon you or not.

Zakat is the term used for the obligatory charity in Islam. It means to purify, i.e. the giving of wealth, purifies wealth. It helps people let go of the world, provides financial support to others, and is a form of showing gratitude to Allah (SWT).

Zakat is fardh on every Muslim who is sane and has reached maturity and has complete ownership of wealth above the level of nisab (threshold). They must also hold this wealth for one lunar year.

The nisab can be calculated based on Gold or Silver.

  • The nisab on the Gold standard is measured at 87.48g, 3.09oz or 7.5 thola
  • The nisab on the Silver standard is measured at 612.36g, 21.6oz or 52.78 thola

                           

Therefore using the following (updated) values for Gold and Silver at today’s rate, this means the current nisab of the Gold standard is:

£994.51oz x 3.09oz = £3073.03

And for Silver it is:

£14.07oz x 21.6oz = £303.91

Now every individual can choose the standard the wish to go by. However most scholars argue that if we go by the Silver standard, more people will be eligible to pay Zakat, therefore more will go to the poor. Whereas others state the Gold standard is better to ensure that the actual wealthy pay, and this also raises the benchmark for those who will be eligible to receive Zakat too, i.e. someone with £2700 in the bank will be considered eligible.

The choice is yours.

In order to fulfil one’s obligation, one must intend (i.e. specify) that they are paying the Zakat. Zakat is also only payable to Muslims.

The Holy Qur’an (Surah Tawbah:Verse 60) tells us who may receive Zakat payments:

  1. The poor – Those whose wealth is below the level of nisab. Priority should be given to relatives, neighbours and then the wider community
  2. The destitute – Those who have nothing at all – food, clothes nor shelter
  3. Administrators/collectors of Zakat
  4. New Muslims – Scholarly differences whether abrogated on not. Used to reconcile with Muslims during advent of Islam, some scholars claim this still is the case with new disenfranchised Muslims
  5. To free slaves
  6. Those who are unable to pay their debts
  7. In the path of Allah (swt) – this can be towards someone’s studies or marriage
  8. Travellers who cannot afford to return home

The method of working out Zakah is:

  1. Record when you first reached Nisab (pick Gold or Silver)
  2. Wait one lunar year
  3. Calculate all assets
  4. Minus liabilities and debts owed to others
  5. See if you still meet the Nisab value
  6. If so, 2.5% of total amount of assets at this date
  7. If not, wait until the next time you reach nisab then continue from 2.

Example (Gold standard)

Ahmed starts a new job, he gets paid £1500 per month but is left with £200 at the end of the month. At this point he is below the nisab. After 5 months, he manages to save £3500. He notices he has met the nisab.

Ahmed will make a note of the date he saved £3500 (lunar date). This is the 12th Rajab. From then on Ahmed saves monthly, but when he reaches Muharram (6 months later), he uses his savings of £8000 to buy a car valued at £7500. This leaves him with £500, at this point no Zakat is due by Ahmed. However he continues counting towards the 12th Rajab. After further savings, on the eve of 12th Rajab, he manages to save £4000. Ahmed considers his liabilities and notices he doesn’t owe anyone money but has £400 of bills and insurance to pay this month. 

At this date he calculates whether he is above the nisab value, which he is (£3600). So he must pay 2.5% of that (£90) in Zakat. Ahmed should look to make immediate payment as it would not be permitted to delay payment to Ramadhan.

Zakat Calculator

I’ve created a Zakat Calculator below for your convenience. I’ve entered random numbers as examples. Just click download.

FAQ

What happens if someone is below the nisaab after one year?

If a person comes to know they are below the nisab after one lunar year then they wait till the next time they meet the nisab. This is their new nisab date, for which Zakat may be due after one lunar year.

Is Zakat payable on valuable stones and jewels?

If these valuable stones and jewels [i.e., other than gold and silver] are for the purpose of trading, then they are liable for Zakat. If however, they are used for one’s personal use, Zakat does not need to be paid on it, irrespective of their value.

During the year, can the Zakat be paid in advance through small installments?

Yes, someone who is legally responsible to pay the Zakat can pay through monthly instalments throughout the year, with the intention of paying the Zakat. When the lunar year comes to an end, the Zakat should be calculated, and whatever remains outstanding should be paid off. In similar fashion, the outstanding amount can also be paid through installment.

Should the Zakat and Sadaqa be paid only in Ramadan?

It is obligatory (wajib) to pay the Zakat as soon as the lunar year has passed, and its payment should not be deferred till the month of Ramadan. However, if Ramadan is drawing near, such as a week away, then there is no harm in waiting till Ramadan to pay it.

Can a husband and wife give their Zakat to each other?

No, a husband and wife cannot give their Zakat to each other. Nor father to son, as the welfare of these people is inherent.

Can a husband pay a wife’s Zakat

No, the wife must pay her own Zakat. This should preferably be from the wealth she holds however the husband can gift her money. And from that money she can uses it to pay her Zakat. However note, this will become an asset and count towards her nisab.

Children savings

If the money belongs to the children, then the children do not pay zakat on the wealth. This is because, by the time, they are mature the majority of money may get eaten up by the zakat payments. If however its your money but set aside for children’s needs, and is at your discretion then this will be part of your assets.

Is Zakat to be paid upon property or land?

Zakat is not due on residential properties however, if one rents out a house, flat, or shop for the purpose of making profit, then this will count as an asset. Zakat must also be paid on the value of one’s house, flat, or land which was bought originally with the purpose of re-sale (i.e., for business or trade purposes). The Zakat should be paid on the current market value, and not the purchase price.

Zakat is compulsory on trade goods and merchandises (i.e., items which are bought with the intention of re-sale), but not on tools or equipment used in trade or business. However, the profit gained by their use, if it reaches the nisab and a year has passed, it becomes compulsory to pay the Zakat on this.

Is a mortgage a liability?

As a mortgage comes with a term, the total value can not be considered a debt, as immediate payment is not required. However one may deduct the monthly payments as liabilities.

Pensions

For personal pension funds, one should calculate the amounts accrued for the full lunar year. However if one has a work pension, they do not have to pay zakat on it, till they are paid out.

Hashimis

The recipient should not be from the lineage of the Prophet

Zakat-ul-Fitr

Zakat-ul-Fitr is universal amongst all Muslims, regardless of individual income and age. Therefore it is due on every member of the household. It is based on the average consumption of members of the household, to which there is a cash equivalent (£3-£5). This money is then given to those in need (the poor and needy, captives, debtors, travelers and so on) before commencing Eid-ul-Fitr Salaah (Eid-ul-Fitr prayer). This is also known as Fitrana and Sadaqatul Fitr.

If you have any questions, leave a comment below and I will get them answered.

11 Comments

  • I havent paid zakat for the last 5 years. do i need to calculate all five years individually then pay it all at once?

    • Yes you should find the date you first met nisaab then see whether you still meet nisab the following lunar year. If so, pay 2.5% in zakat. You can calculate all 5 years individually and then pay all at once if you like. If you feel it will endue hardship upon you then you can pay in installments.

  • i showed my dad this post to see if he pays the zakat properly. he is 56 years old and says he’s learnt something new and gives him assurance that hes paying zakat corrrectly

  • If you are paying zakat for 3 years ago, do you use the gold value of that date or the gold value of today?

  • is it appropriate to gift someone some money knowing that f you do, it will leave you under the nisab?

    • Its permissible to gift someone money whenever you wish. If its prior to your zakat payment date then yes, you will deduct it from your assets however if the gift is done out of maliciousness (or with the intention of return after the zakat date), then know that you cant fool Allah.

Leave a Reply