Knowledge Bank

Islam primarily describes a state of subservience, along with a core set of beliefs and instituted acts.

The Prophet (may Allah’s salutations and peace be upon him) stated that Islam, that is the same state of subservience, is built on five distinctive acts:

1. Testifying that there is no god but God and that Muhammad is the messenger of God,
2. Maintaining Salat,
3. Giving the Zakat,
4. Fasting in Ramadan,
5. The pilgrimage to the House – for those who are able to find a way.

Being built on suggests a number of things; that these five things form the basis of true subservience to God, and in being a basis it follows that everything else in the faith follows on from them, rather than there being other aspects of the faith sitting alongside them, and thus of equal elemental disposition.

Looking at it this way, these five distinctive acts do not merely engender a ritual disposition but offer a robust course of development that founds the most fundamental aspects of complete subservience. Thus, when these foundations are implemented individually and collectively as institutions, it paves the way for Islam to flourish in the lives of those in society, resulting in a society committed to God.

Here are some elements to take into account:

When it comes to calculating and paying Zakat within the couple, it is not always easy to distinguish who owns what. To make the calculation easier, here are some guidelines:

1. First of all, it is important to know that zakat is a personal duty, which de facto implies that the man and the woman must calculate their zakat separately. Since zakat is a personal responsibility, it is up to each individual to make his or her own calculation of zakat.

2. When the amount to be paid is calculated (see our zakat calculator), each person can pay his or her zakat himself or herself. The man or woman can make the payment for both, this is equally valid.

3. If the couple uses a joint account, and it is difficult to distinguish who owns what, then we advice to divide the amount in this account by 2 and include this amount in each person’s separate calculation.

4. It is quite possible and normal for one person to be eligible to pay zakat (as it is above the Nisab) and the other not (as it is below it). There is no problem with this.

If you have any questions, please do not hesitate to contact us via our contact section. Our team will answer you as soon as possible.

Your SZF team

An asset must fulfil the following criteria to qualify as a Zakatable asset:

1) Complete ownership of the asset

2) The asset is productive (intrinsically or extrinsically)

3) The wealth is equivalent to Nisab or more

4) A whole lunar year passes after possessing Nisab

Complete ownership of wealth:

Complete ownership refers to having ownership and the ability to benefit from a Zakatable asset. It is not necessary to have direct possession; one may have indirect possession such as having cash deposited in the bank or money kept with a relative. This is agreed upon by the mainstream schools of jurisprudence.

Asset is productive:

Zakat is binding on wealth which is productive according to all four schools of jurisprudence.

Productivity in terms of Zakat refers to the potential of an asset to grow and increase. Productivity of an asset can be intrinsic as is the case with gold, silver and cash. Productivity can be activated by an intention to trade when purchasing stock or investing into Zakatable assets. And finally, productivity can be established through the breeding of flock.

Besides these three causes, the Shariah has not recognised any other cause of productivity. Personal assets and belongings which may appreciate will not be Zakatable despite growing in value as they are not productive wealth in Zakat terms.

The wealth is equivalent to Nisab or more:

For the payment of Zakat to be obligatory, it must equal or exceed the Nisab threshold on the Zakat anniversary.

A whole lunar year passes after possessing Nisab:

After owning Nisab for the first time, Zakat is obligatory after the passing of one lunar year. Thereafter, Zakat will be due every year on the same date if the qualifying conditions are found. It is not necessary for a year to pass on every single Zakatable asset, rather, the same Zakat anniversary will be used for other Zakatable assets such as gold, silver, cash and business stock acquired during the year.

According to the Hanafi school, Zakat is not obligatory on children who are not mature.

According to the Maliki, Shafi’I and Hanbali schools, Zakat is obligatory on the wealth of children.

Just like Salat, Fasting and Hajj have conditions before they become obligatory, Zakat also has conditions before it becomes compulsory.

Zakat is only obligatory when certain conditions are met. There are two sets of conditions:
1) conditions relating to wealth
2) conditions relating to the Zakat payer

Whoever has the following three characteristics qualifies to pay Zakat : 1) Adolescent
2) Muslim
3) Sane Adolescence (have reached the age of puberty)

In Islam, mature individuals are obliged to perform the compulsory forms of worship such as Ṣalāt, Zakat, Fasting and Ḥajj. Islam considers adolescents as mature. A person is adolescent when experiencing puberty. The following are some indications of puberty :
1) Experiencing a wet dream
2) Menstruation
3) Reaching fifteen lunar years in age (approximately 14 years and 7 months)

Muslim Zakat is an action of worship and it is only obliged on those who have faith in Islam. Faith in Islam is a primary condition for the requirement of all forms of worship.

Sane According to all jurists, a sane person qualifies to pay Zakat if other conditions are found. A sane person is one who has mental capacity.
Differences of opinion: • The orphan • The child (pre-puberty) • The mad / insane.

The three schools of jurisprudence other than the Hanafi school state that Zakat should be paid on qualifying wealth owned by the orphan, child and the insane.

The three schools of jurisprudence consider the ownership of wealth reaching the Nisab as the driving factor behind the Zakat obligation.

Furthermore, the child, insane and orphan’s wealth will also benefit from the purification of wealth due to the payment of Zakat. The Hanafi school considers the element of worship in Zakat and therefore opines that Zakat is not binding on the orphan, child and insane.

Since these individuals are not obliged to perform worship, they are not obliged to pay Zakat. However, if a person has intermittent sanity, they will be required to pay Zakat. Only a person with continuous insanity and mental incapacity is exempt from Zakat.

The parent/guardian will be responsible to pay Zakat on the wealth of the orphan, child and insane. They can pay from the wealth of these individuals.

Paying Zakat has been associated to several physical and metaphysical benefits in the Quran. Some of them are as follows:

1) The means to attain Allah’s mercy “My Mercy extends to all things. That (Mercy) I shall ordain for those who have God-consciousness and give their Zakat and those who believe in Our Signs.” (Sūrah Al-A`rāf 7:156).

2) A precondition to obtain Allah’s help “Allah will certainly aid those who aid His (cause); for verily Allah is Full of Strength, Exalted in Might, (able to enforce His Will). (They are) those who, if We establish them in the land, establish regular prayer and give their Zakat, enjoin the right and forbid wrong: with Allah rests the outcome of all affairs.” (Sūrah Al-Ḥajj 22:40-41).

3) A sign of brotherhood in religion “But (even so), if they repent, establish regular prayers, and give their Zakat, they are your brethren in Faith.” (Sūrah Al-Taubah 9:11).

4) A distinctive feature of the faithful community “The Believers, men and women, are protectors one of another: they enjoin what is just and forbid what is evil: they observe regular prayers, pay their Zakat and obey Allah and His Messenger. On them will Allah pour His Mercy: for Allah is Exalted in power, Wise.” (Sūrah Al-Taubah 9:71).

5) A distinctive quality of the believers who go to and maintain mosques “The mosques of Allah shall be visited and maintained by such as believe in Allah and the Last Day, establish regular prayers, and pay their Zakat and fear none (at all) except Allah.” (Sūrah Al-Taubah 9:18).

6) A distinctive quality of the true believers: “Who are active in paying Zakat.” (Sūrah Al-Mu’minūn 23:4). And as important as Ṣalāh “And establish the prayer and pay the Zakat and bow (in prayer) with those who bow.” (Al-Baqarah: 43)

Abdullah Ibn ‘Umar (May Allah be pleased with them) said: “No people refuse to pay the Zakat of their wealth, except they will be denied of receiving rain drops from the sky. Had there not been for the animals, they would never receive rain.” (Sunan Ibn Majah)

This Hadith indicates to the relationship between actions and conditions we face. Non-payment of Zakat, which is disobedience to Allah in Islam, has direct and indirect consequences on the natural environment.

Allah has decreed balance and equilibrium in His creation and when this balance is disturbed, the natural order in the creation is interrupted.

The types of actions or the non-action of the human being, both individually and collectively, personally and spiritually, has the potential to breed adverse results in the physical space we inhabit.

Zakat literally means blessing, growth, cleanliness and betterment .The word Zakat originates from the Arabic verb zaka’, meaning to grow, to increase and to purify.

When said about a person, it means to improve or to become better. In Islamic law, the word Zakat refers to the determined share of wealth prescribed by Allah to be distributed among the deserving categories of recipients.

The word Zakat originates from the Arabic verb zaka, meaning to grow, to increase and to purify.

When said about a person, it means to improve or to become better. In Islamic law, the word Zakat refers to the determined share of wealth prescribed by Allah to be distributed among the deserving categories of recipients .

The word Zakat is mentioned thirty-two times in the Quran; Thirty from the thirty-two are in the technical meaning of Zakat whilst two are in the linguistic meaning of Zakat. The two places are:

1) Sūrah al-Kahf (The Chapter of The Cave), verse 81
2) Sūrah Maryam (The Chapter of Mary), verse 13

According to all jurists, a sane person qualifies to pay Zakat if other conditions are found. A sane person is one who has mental capacity.

According to the Hanafi school, Zakat is not obligatory on an individual who lacks mental capacity.

According to the majority of scholars, Zakat is obligatory on the wealth of those who lack mental capacity.

The Hanafi school are of the view that a person with continuous insanity and mental incapacity is exempt from Zakat. However, a person with intermittent sanity is still required to pay Zakat

Zakat and Sadaqah are forms of worship done by Muslims. The two are different in their own respects.

The word Sadaqah is derived from the Arabic word Sidq (truth). All actions of righteousness in Islam is considered as Sadaqah. Zakat on the other hand, is one of five fundamental foundations of Islam. This makes it a compulsory act, and therefore, all Muslims must give Zakat, provided they meet certain conditions, while Sadaqah is an intended and continuous act of uprightness, which everyone has to carry out no matter what their ability.

Here are 10 key differences between Zakat and Sadaqah, understanding them is crucial as each has its own purpose.

1. Zakat is obligatory once a year whilst Sadaqah is never obligatory
2. Zakat is paid on specific assets such as: gold, silver, cash, business assets, agricultural produce, livestock, treasure troves whereas Sadaqah has no such specification in terms of assets.
3. Certain liabilities can be deducted from a Zakat calculation whereas Sadaqah has no calculation in which liabilities are deducted.
4. Zakat was collected and distributed by the Islamic government whereas Sadaqah is always a personal act of kindness.
5. According to some schools of law, Zakat can be forcefully taken. The state can take punitive measures on the non-payers of Zakat. Whereas, Sadaqah is never enforced upon people.
6. Abandoning Zakat payments is tantamount to a type of treason whereas not giving Sadaqah is not sinful.
7. Zakat has thresholds and bands (Nisab) whereas Sadaqah has no thresholds.
8. Zakat was generally distributed where it was collected whereas Sadaqah can be spent anywhere.
9. Zakat has specific areas and categories for spend whereas Sadaqah does not have defined recipients.
10. Zakat is monetary whereas Sadaqah can be non-monetary too.

Zakat plays a huge role in establishing Islam in the lives of individuals and the community, by resourcing them in such a way that barriers to ongoing faithfulness at both an individual and collective level are reduced or removed altogether. Zakat has a direct benefit for the payer and society.

As far as the payer is concerned, ones personal Islam is established and strengthened by believing in the obligation of Zakat and paying Zakat accurately. In respect to the society, then the cornerstone of its Islam and subservience to Allah being strengthened is by the holistic, strategic distribution of Zakat.

1. Zakat is paid once a year
2. Zakat is paid on specific assets such as: gold, silver, cash, business assets, agricultural produce, livestock, treasure troves
3. Certain liabilities can be deducted from a Zakat calculation
4. Zakat was collected and distributed by the Islamic government
5. According to some schools of law, Zakat can be forcefully taken. The state can take punitive measures on the non-payers of Zakat,
6. Abandoning Zakat payments is tantamount to treason
7. Zakat has thresholds and bands (Nisab)
8. Zakat was generally distributed where it was collected
9. Zakat has specific areas and categories for spend
10. Zakat cannot be given to facilitate sin

The above operation clearly demonstrates that Zakat has an operational reality to it; it is not simply a charity. The clear guidelines and governmental framework exhibit that Zakat is an institution within a system. One could almost argue that the payment of Zakat and Zakat distribution operate like a wealth tax and has elements of government public sector spending, however, the spiritual element in Zakat makes it more wholesome than tax. Zakat is not viewed as a burden. It is considered more as a commitment and membership payment to a godly cause. The spiritual filter of Zakat makes it different to a secular welfare and benefit system.

1. Fulfilling the needs of the Muslims
2. Assisting and strengthening Islam

From the eight categories of Zakat, the following three categories are not related to poverty alleviation: Amilin alayha (Zakat administrators), al-Mu’allafati Qulubuhum (winning hearts) and Fisabilillah (in the cause of Allah). These categories all go back to the aim of assisting and strengthening Islam. It is worth noting that even the first objective has a critical function to play not just in providing a believer with the material resources he/she requires for essential needs, but in their individual sense of belonging to the Muslim community and in their own ability to maintain a healthy and sustainable state of subservience. In one prayer, the Prophet ﷺ sought refuge in Allah from “disbelief and poverty” (Sahih Ibn Hibban). In another statement, he indicated that poverty leads to disbelief (Al-Tabarani and al-Bayhaqi).

The word Ṣadaqah shares the same Arabic root letters with the word Ṣādiq. Ṣādiq means truthful . Paying Ṣadaqah is a true testimony of one’s faith.

In Islamic law, Sadaqah refers to any donation or payment seeking the pleasure of Allah.

In terms of usage, Sadaqah refers to voluntary payments. However, the term Sadaqah has been used a few times figuratively to refer to Zakat in the Quran and Sunnah .

Although Sadaqah has generally been used by jurists for voluntary payments and donations, the prophetic traditions use “Sadaqah” for non-monetary actions such as smiling also. Sadaqah in such narrations refers to reward.

Zakat is the third pillar of Islam.

This is understood from the prophetic tradition narrated by ‘Abdullah ‘ibn ‘Umar ibn Al-Khattab (may Allah be pleased with them) who said: I heard the Messenger of Allah (Allah’s blessings and salutations be upon him) say:

“Islam has been built on five [pillars]: testifying that there is no god but Allah and that Muhammad is the Messenger of Allah, performing the prayers, paying Zakat, making pilgrimage to the House, and fasting in Ramadan.” (Sahih al-Bukhari & Sahih Muslim)

These pillars are the foundation of Islam; without the presence of these pillars, Islam is non-existent at a macro and micro level. Thus, Zakat plays a huge role in establishing Islam in the lives of individuals and the community, by resourcing them in such a way that barriers to ongoing faithfulness at both an individual and collective level are reduced or removed altogether.

The first difference between Zakat and Zakat al Fitr is eligibility. All Muslims must pay Zakat al Fitr regardless of their age or financial status (unless they honestly do not have the means to do so. The second difference lies in the amount due. The amount attributed to Zakat al Fitr is very small, and rarely exceeds £5. Zakat, however, can amount to a larger number because its 2.5% of all net savings.

The third and final difference lies in their due dates. Zakat can be paid at any time, with the only condition being that the earnings reflect one year’s worth of net savings (one lunar year). Zakat al Fitr , however, goes hand in hand with Ramadan. Zakat al Fitr is paid during Ramadan before the month ends. It needs to be paid before the Eid prayers at the very latest. This is a very specific time frame that all Muslims must abide to.

The Quran gives examples in several verses telling us how Zakat was instructed to the previous Prophets. For example:

Zakat of Prophet Isma’il (peace be upon him):

“Also mention in the Book (the story of) Isma’il: He was (strictly) true to what he promised, and he was an apostle (and) a prophet. He used to enjoin on his people Salat and Zakat, and he was most acceptable in the sight of his Lord.” [Quran 19:54-55]

Zakat of the Banu Isra’il:

“And (remember) when We made a covenant with the Children of Israel, (saying): Worship none save Allah (only) and be good to parents and to kindred and to orphans and the needy and speak kindly to mankind; and establish Salaah and pay Zakat.” [Quran 2:83]

Zakat to the progeny of Prophet Ishaq (peace be upon him): and Prophet Yaqub (peace be upon him):

“And We sent them inspiration to do good deeds and to be diligent in the Salat and pay Zakat.” [Quran 21:73]

Zakat of Prophet Isa (Upon whom be peace):

“He said: Lo! I am the slave of Allah. He has given me the Scripture and has appointed me a Prophet. And has made me blessed wheresoever I may be and has enjoined upon me Salat and Zakat so long as I remain alive.” [Quran 19:30-31]

In Makkah, the verses on Zakat generally pertained to individual charitable payments, and it was left to the individual’s faith and own conscience to decide how much to give and whom to give it to.

We know Zakat was revealed whilst the Prophet was in Makkah as Meccan verses make reference to Zakat payments. For example, in the Meccan chapter titled, ‘The Ascending Stairways’ (Sūrah al-Ma’ārij), Allah Almighty makes reference to Zakat with the following words:

“And in whose wealth there is a right acknowledged. For the beggar and the destitute.” (Quran, 70:24-25)

Around eighteen months after the arrival of the Prophet (Allah’s blessings and salutations upon him) in Madinah, Zakat became institutionalised. Madinah verses gave clear directives ordering the payment of Zakat. In the Medinan period, the Prophet would send out Zakat collectors and distributors.

Great scholars such as Ibn Khuzaymah and Ibn Kathir were of the view that Zakat became obligatory in Makkah whilst other scholars are of the view that Zakat became obligatory after the Hijrah in al-Madinah .

The obligatory nature of Zakat has been established in the most definitive and authentic sources of Islam, namely, the Quran and Sunnah. In addition, there is a scholarly consensus (‘Ijma’) on the obligatory nature of Zakat.

Considering all the above, rejecting the obligatory nature of Zakat draws a question mark on a person’s belief as much as it makes the individual reject an entire heritage and generation.

The three schools of jurisprudence other than the Hanafi school state that Zakat should be paid on qualifying wealth owned by the orphan, child and the insane.

The three schools of jurisprudence consider the ownership of wealth reaching the Nisab as the driving factor behind the Zakat obligation. Furthermore, the child, insane and orphan’s wealth will also benefit from the purification of wealth due to the payment of Zakat.

The Hanafi school considers the element of worship in Zakat and therefore opines that Zakat is not binding on the orphan, child and insane. Since these individuals are not obliged to perform worship, they are not obliged to pay Zakat. However, if a person has intermittent sanity, they will be required to pay Zakat. Only a person with continuous insanity and mental incapacity is exempt from Zakat .

The parent/guardian will be responsible to pay Zakat on the wealth of the orphan, child and insane. They can pay from the wealth of these individuals.

Technically, Nisab is the minimum threshold of wealth a person must own on their Zakat anniversary at which point Zakat becomes obligatory. Considering the linguistic meaning, Nisab is the origin and starting point of Zakat obligation.

“If you have 200 dirhams, and it has been saved for a year, (you are) obliged to pay 5 dirhams of Zakat from it. And there is no obligation of Zakat in gold, until you have 20 dinars. If you own 20 dinars and it has been saved for a year, half a dinar must be paid.” (Sunan Abu Dawud)

This was stipulated by the Prophet (Allah’s blessings and peace be upon him).

Allah has placed intrinsic worth and value in gold and silver. Gold and silver have universal value and worth. Investopedia describes the natural phenomenon of these metals in the following manner:

Gold doesn’t corrode and can be melted over a flame, making it easy to work with and stamp as a coin. Finally, gold has a unique and beautiful colour, unlike other elements. The atoms in gold are heavier and the electrons move faster, creating absorption of some light; a process which took Einstein’s theory of relativity to figure out.

From a elemental perspective, gold is the most logical choice for a medium of exchange for goods and services. It is abundant enough to create coins, but rare enough that not everyone can make them. It doesn’t corrode, providing a sustainable store of value, and humans are physically attracted to its colour and feel.

In the Prophetic era, the bimetallic currency was common. Arabia used both dinar, the byzantine currency, and the dirham, the Persian currency. When Islam came, the Prophet approved the use of Dinar and Dirham as money. Hence, the Zakat thresholds were pegged on these standards.

There are two standards as opposed to one. The reason for this is that Dinar and Dirham were commonly and interchangeably used in the markets in the Prophetic era. The exchange rate at the time was 1:10, and therefore the Zakat payer ended up paying the same amount in terms of purchasing power in the prophetic era.

The above Nisab conversions are based on the Hanafi school. Other schools have a gold Nisab of 85 grams and 595 grams of silver.

The unit of mass used at the time of the Prophet was different to what is used today. Therefore, scholars converted different units of mass across time keeping the benchmark 20 Dinar of gold and 200 Dirham of silver. Hence, due to the multiple conversions and juristic differences in understanding some weight and volumetric measurements, scholars have slightly different Nisab standards.

A famous opinion of the conversion rates of Dinar and Dirham is :

1 Dinar = 4.374 grams
1 dirham =3.0618 grams

Therefore:

20 Dinar = 87.48 grams
200 Dirhams = 612.36 grams

Other scholars are of the view that the gold Nisab should determine who qualifies to pay Zakat. They argue that the silver Nisab is very low and does not accurately differentiate between the rich and the needy.

Majority of the scholars in the UK favour the silver Nisab as the standard for Zakat payers.

Furthermore, only those items have been allocated for Zakat which have intrinsic growth. Although Zakat is calculated on the capital base as well as profit, the actual payment can generally be covered by the profits. This is understood from the following verse:

“And they ask you what they should spend. Say, “The excess [beyond needs].” Thus, Allah makes clear to you the verses [of revelation] that you might give thought.” (Quran 2:219)

According to one explanation of this verse, the excess refers to the capital appreciation and capital gain of Zakatable assets.

1. Gold and silver
2. Cash and receivables
3. Business stock
4. Investments in Zakatable assets
5. Crops and agricultural produce
6. Animal livestock

Note: There are rules governing the above assets and as such, not everything that may fall in the above will strictly be Zakatable if the other rules and conditions are not met.

1. Gold and silver
2. Cash and receivables
3. Business stock
4. Investments in Zakatable assets
5. Crops and agricultural produce
6. Animal livestock

Thus, all personal assets not in the above are not Zakatable. For example, one’s car, mobile phone, laptop, house, electronic appliances are all not Zakatable regardless of the value.

“…those who hoard up gold and silver and do not spend it in the way of God, give them the glad tidings of a painful punishment” (Quran 9:34)

In a prophetic narration, a woman from among the people of Yemen came to the Messenger of Allah with her daughter. The daughter was wearing two big bangles of gold. The Prophet remarked: “Do you pay Zakat on these? She said: “No.” He said: “Would it please you if Allah were to put two bangles of fire on you on the Day of Resurrection?” So, she took them off and gave them to the Messenger of Allah and said: “They are for Allah and His Messenger.” (Sunan an-Nasa’i)

The Hanafi school treats all gold and silver jewellery as Zakatable, regardless of whether it is worn or stored.

However, the other schools of Fiqh believe that gold and silver for personal use are exempt from Zakat.

White gold is an alloy of gold and at least one white metal, usually nickel, manganese or palladium.

Thus, white gold is treated like normal gold and is subject to Zakāt.

The amount of Zakāt payable would be calculated by multiplying the full weight of the jewellery by the price per gram for gold of that carat.

For example, if one has an 18 carat white gold bangle weighing 50 grams, then 50 grams would be multiplied by the price of a gram of 18 carat gold.

Likewise, if one has a 9 carat white gold bangle weighing 50 grams, then 50 grams will be multiplied by the price of a gram of 9 carat gold.

In principle, Zakah must be paid on gold that one has owned for a full year, not just once, but for every year that one owns it. However, if the owner of the gold is a female whose purpose in acquiring the gold is to wear it, even if it be only once a year and only to weddings, it will not be incumbent to pay Zakat on it.

1. Your local gold jeweller can determine the current value of your gold and silver assets. This is the most accurate method to get the value of your gold and silver. Jewellers will give you the value of your gold according to scrap gold value.

2. Use today’s live gold and silver price in grams – this is known as the universal measurement. These prices are for new gold and are generally more expensive. One may use this measure if they cannot get in touch with a jeweller.

If you use the live gold and silver price, simply multiple the price per gram by the total weight of your gold or silver.

One Tola or Bori or Vori is equivalent to 11.66 grams. We know that the Nisab threshold for gold is 87.48 grams, so this is equivalent to 7.5 Tolas, Voris or Bhoris.

Zakat is not due on base metals besides gold and silver and therefore, Zakat is not due on the base metal of gold-plated jewellery.

In regard to the gold plating, the gold layer is so thin that it can usually be rubbed off with a coarse tool. Therefore, due to the insignificant nature of the layer, Zakat is not due on this either.

Cash kept in a bank account, wallet or under the mattress all qualify for Zakat. The place of preserving one’s wealth and cash makes no different.

A tenancy deposit is a sum of money which a landlord requires a tenant to pay at the start of the tenancy or which the landlord holds over from a previous tenancy with the same tenant. The money is security in case the tenant does not meet their obligations in connection with the tenancy.

Zakat is not binding on a security deposit as it is not in the possession of the tenant – neither constructively nor physically.

In such a scenario, Zakat is not payable on this money anymore.

– Physical or constructive possession of the value of the cheque must be established
OR
– The cheque must have been received in exchange of the sale of some commercial goods

When you pay in a cheque, you’ll be able to use the money four working days later – but you won’t be sure the cheque has cleared (i.e. the money is really yours) until six working days after you’ve paid it in. If you use the money in the meantime, you might have to pay it back. Therefore, physical or constructive possession of the value of the cheque are never achieved just by holding the cheque.

Only in some cases (i.e. when a cheque is signed by the bank e.g. banker’s draft etc) one can assume that possession of a cheque amounts to a constructive possession of the value of the cheque. (Mufti Taqi in Fiqhul Buyu’ p441-452 and AAOIFI Shariah Standards (16) item 6/1 and 6/2)

Based on the above, there will be no Zakat on a cheque in the following scenarios:

– If the cheque was received in exchange of a personal item.
– If the cheque was received as a gift or as part of a distribution of a deceased’s estate.
– If the cheque was received in exchange of a service offered (i.e. accounting, tuition etc) or as a payment for a wage.

Zakat will be paid on a cheque in the following scenarios:

– If the cheque was received in exchange of some commercial goods. (see Zakat on money owed to you)
– If one has received a banker’s draft.
– If one has received a cheque signed by a Building Society.

And Allah knows best!

Mufti Billal Omarjee

checked and approved by Mufti Faraz Adam

The following verse refers to Zakat on business:
“O you who have believed, spend from the good things which you have earned..” (Quran 2:267)

The Sunnah explicitly highlights Zakat on business assets. Samurah bin Jundub (May Allah be pleased with him) said:
‘’The messenger of God commanded us to give Sadaqah (Zakat) on what we intended for trade.’’ (Sunan Abu Dawud)

According to all four schools of jurisprudence, only ‘productive’ assets are Zakatable. Productivity in terms of Zakat refers to the potential of an asset to grow and increase in one of the following ways:

1. Intrinsic productivity
2. Productivity by trading
3. Productivity by the breeding of flock

Gold, silver and their substitute fiat currencies are intrinsically and naturally productive, therefore, no intention (niyyah) of trading is required for them and they are always Zakatable assets in themselves. Other assets (excluding animals pastured for their milk and offspring) such as stock and inventory, require an intention to sell for it to become productive wealth (Mal Nami). This intention of sale must be made at the time of a commutative acquisition. Then, as long as the intention for sale remains, the business asset remains productive wealth (Mal Nami) and continues to be Zakatable.

Intangible assets such as copyright, trademark, patent and goodwill are not Zakatable. These assets are not purchased to resell and neither do they fall under productive wealth (Mal Nami). They are similar to other fixed assets such as property, plant and equipment.

These should be valued at whatever they are worth in their current damaged condition.

Zakat on a business can be calculated in the following three ways:

Stock count

The most precise and ideal method of Zakat calculation is performing a valualtion of stock on one’s Zakat anniversary.

Personal and up to date record

If a stock count is very difficult or impractical, a business should keep a track and record of upto date transactions, cash flow and stock. This can then be used as a fairly accurate method to calculate Zakat.

Use the Balance Sheet

If keeping an accurate record is very difficult and almost impractical due to a high quantity of stock and Zakatable assets, as a last resort, you may use the last balance sheet as a reference for your net Zakatable assets. However, in such a scenario, one MUST do the following two:

1. consider and determine any obvious adjustments to his net Zakatable assets on the actual Zakat anniversary.

2. Apply the gross margin percentage to the value of stock on the balance sheet.

As a precautionary measure to ensure one’s Zakat liability is fulfilled, paying a little more than your net figure is prudent and sensible.

The value of stock and inventory on a balance sheet reflects the cost price and not the current retail price. Therefore, one should try his best to accurately determine the total value of the retail prices of his stock. To get a more accurate representation of the retail price of stock, one may apply a conservative gross margin percentage to his current stock to get an idea of the current retail price of the stock. Remember, gross margin is net sales less the cost of goods sold. This can be determined from the income statement.

Determining Gross Margin Percentage

Step 1: Look up Net Sales and Cost of Goods Sold in the income statement found in the company’s accounts.

Step 2: Minus the Cost of Goods Sold from Net Sales. This will give you a gross profit figure.

Let’s assume that a company has net sales of £50,000 and its cost of goods sold is £40,000. This means its gross profit is £10,000 (net sales of £50,000 minus its cost of goods sold of £40,000).

Step 3: Calculate the percentage of gross profit in relation to the net sales.

£10,000 (gross profit) is 20% of £50,000 (net sales). Therefore, the gross margin percentage is 20%.

Step 4: Apply the gross margin percentage to the value of stock on your balance sheet.

If the current stock is valued at £100,000, the proxy of 20% can be utilised by adding 20% to the current stock value. Therefore, the current stock can be estimated to be worth £120,000 at retail price.

It would be praiseworthy and prudent to pay extra Zakat on stock to cover any possibility of miscalculation.

The Zakat treatment for business assets is principally based upon the intention at the time of purchasing an asset or stock. Assets purchased to resell are Zakatable business assets. However, a person can have different intentions when purchasing an asset, therefore, it is worth considering the different types of intentions and their consequences in respect to Zakat liability.

1. Clear intention to resell

If an asset is purchased with the express intention to resell, it will be a Zakatable business asset regardless of when it is eventually sold.

2. Clear intention for personal use

If an asset besides gold, silver or currencies was purchased for personal use, then such an asset will not be Zakatable.

3. No clear intention

If an asset is purchased without any intention or without a clear and express intention, then the asset is not Zakatable.

4. A conditional intention

If an asset is purchased for personal use with an intention of selling only if there is capital appreciation, such an asset will not be Zakatable. Similarly, if an asset is bought for personal use or as buy to let with the intention to sell one day in the future upon favourable market conditions, the asset will not be Zakatable.

5. Clear intention to resell in future but leased in the interim

If an asset is bought to resell but is leased in the interim, the property or asset will be zakatable if the intention to resell remains and it is still treated as saleable in the interim.

Remember

All four schools of jurisprudence agree that for a business asset to be Zakatable, an intention to resell that asset must be present at the time of purchasing that asset.

If an asset is purchased with the express intention to resell, it will be a Zakatable business asset regardless of when it is eventually sold.

All four schools of jurisprudence agree that for a business asset to be Zakatable, an intention to resell that asset must be present at the time of purchasing that asset.

The majority of scholars assert that an intention to resell must coincide with a commutative transaction like a sale. An intention to resell which coincides with non-commutative transactions like gifting and inheritance will not make an asset a Zakatable business asset.

A business asset will no longer be Zakatable if a person changes his mind about selling the item and stops trading that asset.

Personal items up for sale will not be Zakatable whilst on the market. Only the net cash from the eventual sale on one’s Zakat anniversary is Zakatable.

If an asset is purchased with the express intention to resell, it will be a Zakatable business asset regardless of when it is eventually sold.

If an asset is bought to resell but is leased in the interim, the property or asset will be Zakatable if the intention to resell remains and it is still treated as saleable in the interim.

1. The person who buys shares as an investment and wants to attain dividends – this type of shareholder pays Zakat on the percentage of Zakatable assets on the balance sheet – NOT the entire market value of the shares

2. The person who buys shares to sell – i.e. trading stock. This type of shareholder must pay Zakat on the market value

STEP 1: Get hold of the balance sheet

If shares are bought as an investment to attain dividends, the shareholder needs to view the balance sheet of the company. This can be acquired by searching online by simply typing in the company name followed by balance sheet e.g. “XYZ Balance Sheet”.

STEP 2: Identify Zakatable assets on Balance Sheet and add up their values

The following are typical Zakatable assets on a balance sheet:
• Trade and other receivables
• Inventories
• Derivative financial instruments
• Investments
• Cash and cash equivalents

The following are typical non-Zakatable assets:
• Intangible assets
• Property, plant and equipment

Add up the value of all Zakatable assets on the balance sheet.

STEP 3: Subtract deductible liabilities from the Balance Sheet

The following are typical deductible liabilities on a Balance Sheet:
• Current loans and other borrowings
• Trade and other payables
• Current tax liabilities

STEP 4: Find out the market cap (the worth) of the company

Find the market cap of the company you have shares in by simply making a search online of ‘Market Cap XYZ’. This should show up on the search:

STEP 5: Calculate the percentage of Zakatable assets in the company

Divide the net Zakatable assets by the market value of the company and multiply by 100. This will give you a percentage.

STEP 6: Calculate the equivalent amount in pounds of the percentage acquired from step 5

Apply the percentage calculated from step 5 to your shares. You will get a value in pounds.

Step 7: Pay Zakat on shares by paying 2.5% of the value from step 6 or add it to the rest of your calculation

Pay 2.5% Zakat of the Zakatable assets amount in pounds.

Ideally, a complete calculation and review of the balance sheet should take place to determine precise Zakat liability on any Sharia compliant shareholding. However, due to the technicalities and difficulties in this, a person may use a proxy of 25%.

When using the proxy, calculate 2.5% of 25% (0.625%) of one’s entire shareholding and pay the sum as Zakat.

This proxy cannot be used by shareholders of private limited companies. Likewise, a small company or start-up which is known to have only cash assets, should not use this proxy. Limited companies, startups and general partnership companies may contact NZF to work out their Zakat liability.

Note: The previous NZF recommendation of 40% is no longer applicable. Each year the proxy is revised to keep up to date with the most accurate representation of the composition of listed companies.

e.g. if your portfolio is worth £10,000, take 25% which is £2,500 and then 2.5% of this which would be £62.50.
The increase and decrease in portfolio value is irrelevant – only the current value matters.

Remember your Zakat in due on how much the shares is worth on your Zakat anniversary date.

After selling the share, the proceeds will be liable for Zakat if you still own these funds on your Zakat anniversary.

Zakat is not due on children who are minor and prepubescent in the Hanafi school. However, according to the Shafi’i, Maliki and Hanbali schools, Zakat is obligatory on the wealth of minor children also. Thus, in the Hanafi school, the issue of Zakat on CTFs will only be questioned upon maturity and puberty of the child.

There are three types of Child Trust Funds:

1. Stakeholder account

These accounts see your children’s savings put into stock market investments. Stakeholder rules mean that charges are capped at 1.5% a year, and they have to be invested in a wide mix of investment types. After the child’s 13th birthday, the investments are transferred to less risky portfolios.

2. Shares account

These types of accounts allowed you to either pick an investment fund to put your children’s savings onto the stock market, or pick your own investments.

3. Savings account

Such CTFs are not invested in shares, rather, they accrue interest.

In regards to the Stakeholder and shares Child Trust Funds, Zakat will be due on the underlying Zakatable assets in the fund. This can be gauged by looking at the asset composition in the fund. One will pay Zakat on the proportion of Zakatable assets in the fund.

In a savings Child Trust Fund, the entire amount minus the interest element is Zakatable. One hundred percent of the interest earnings must be relinquished in charity. At the same time, one should move to a Shariah compliant CTF.

Regarding the timing of Zakat on CTFs, the mature child can pay Zakat on it every year before having the ability to access the funds. It is also permissible to delay the payment of Zakat upon accessing the funds. If one chooses to wait until access, it will be obligatory to backdate and pay Zakat for the previous years after becoming mature until acquiring access.

According to our understanding, Bitcoins are Zakatable. One may pay 2.5% of his Bitcoin holdings as Zakat or alternatively, pay 2.5% Zakat in one’s domestic currency equivalent to the value of 2.5% of one’s Bitcoin holdings.

The Fiqh (jurisprudence of the answer):

Bitcoins are Zakatable as they are Mal (wealth), have Taqawwum (Islamic legal value) and are in the ruling of a currency (Thamaniyyah).

Does a currency have to have alternative utility besides a medium of exchange? Mufti Taqi Uthmani clearly states that “Money has no intrinsic utility, it is only a medium of exchange” (An Introduction to Islamic Finance). If something is adopted as a currency which has other utilities, the other utilities are not considered when exchanging this currency for another currency – the other utilities are considered ma’dūm (non-existent).

For anything to be considered as Mal, it must have desirability and storability. Bitcoin possesses features which gives it desirability. For example, the blockchain technology behind Bitcoin, the replacement of trusted party intermediations with the proof-of-work protocol, decentralisation, limited supply and borderless payments with less transactional fees make Bitcoin desirable (some of these features are diminishing). This has resulted in a demand for Bitcoin. In respect to storability, Bitcoins are encoded within the blockchain and are entries on a public ledger. Your ownership is reflected by your Bitcoin address being credited with a balance. Considering that Bitcoins are merely digits and entries on a public ledger, there is no evidence or premise indicating to them being unlawful. Hence, Bitcoins have Taqawwum. In terms of Thamaniyyah, Bitcoin was created as peer to peer payment systems. As a result, they are established as currencies

It can be argued that Bitcoin was launched as media of exchanges and as currencies. They are introduced as currencies and are usable as currencies. The blockchain provides a system for this currency. The fact that people are using them as investments does not negate their currency feature. It just gives them similarity to investing in foreign currencies. Indeed, Bitcoin has features which make them unique. If in future they ceased to be used as a medium of exchange and nor was there any speculative increase in their price, would Bitcoin hold any value among people? Would people have Tamawwul of Bitcoin and use of them? Bitcoin would be meaningless digits. Therefore, at present, they have some monetary use and people have assigned ‘a value’ to these Bitcoins. A ‘value’ is envisaged by the people as they purchase, sell, accept and exchange the form of Bitcoins for the underpinning notional value. The value of things can be manipulated, exploited and speculated. These are external issues which require regulation and control.

The philosophy of value has to also be reconsidered. The technological developments in the last century have reshaped and redefined our way of life. For example, value is represented today by mere digits on a bank app which are backed by the government. Society gives value to digits displayed in their bank balances because of the system and acceptability of these digits among people. If an alternative system was created which gave a certain degree of trust, security, ease of use and similar features, why can’t the digits on that system be considered to be digits representing value? A system which is acceptable among people is sufficient to establish a currency in Shariah.

Value is a concept; something people have social concurrence on. Value is something which attracts Mayl (inclination). This value is a meaning, a notion underpinning cryptocurrency digits. The value in Bitcoin is there due to the practices and inclinations of the people. The digits shown as a balance in digital wallets and on the public ledgers represent a value in the minds of people. People have an economic inclination to it and have economic benefit from these Bitcoin. There is no other tangible gain from Bitcoin. Thus, the most plausible interpretation (Takyif) seems to be that Bitcoin is a currency. All other issues with regards to volatility, laundering, black markets etc. are all external matters which need controls and regulation to address them.

1. Check your pension statements
2. Call your pension provider
3. If it is a workplace pension, consult the HR department

To calculate Zakat on your pension, you need to:

Step 1: Identify the asset class information of your pension fund

This can be done by one of the following ways:

a. Look at the asset allocation on the Pension Factsheet in your statement.
b. Search the name of your pension fund on www.trustnet.com to see the asset allocation and breakdown.

Step 2: Determine the total percentage of Zakatable assets in your pension fund

Add up the percentage of all Zakatable assets in the pension fund.

Step 3: Apply the percentage on the total value of your pension fund

To determine the value of Zakatable assets, apply the percentage of Zakatable assets on your pension fund.

Step 4: Pay 2.5% Zakat on the figure determined from step 3

One of the reasons why Zakat is not due on life essentials such as food, shelter and clothes is that these items ward off harm from oneself. They are essentials to survive and they preserve life. The repayment of debt is also considered an essential of life; repayment of debts protect a person from punitive measures and legal action. Therefore, Zakat is not due on immediate debts just as Zakat is not due on other life essentials.

Certain debts can be deducted from one’s value of assets in a Zakat calculation.

Deductible debts:

1. Debts payable in full within 12 months

Incurred expenses to be settled in full within 12 lunar months can be deducted from one’s Zakat calculation.

2.12 months’ instalments of long term liabilities

If the debt is scheduled to be repaid over a number of years, on the Zakat anniversary, one may deduct one year’s worth of instalment repayments.

3. Arrears

All arrears and overdue payments can be deducted from one’s Zakat calculation.

4. Personal loans from relatives and friends

The amount you intend to repay in the next 12 months.

5. 12 months of Bank loans

The capital repayment due for the forthcoming lunar year from a long-term bank loan can be deducted. Any interest element is prohibited and cannot be deducted.

With regards to debt deductions, there is permissibility cited by scholars to deduct one year’s worth of repayments. However, this deduction should only be made if paying Zakat will impact your ability to repay the debt. If the Zakat payment does not impact your ability to repay your debt, we encourage that the deduction is not made or at most, deduct one month’s debt payables. The reason for this is that the philosophy of deducting debts was based on Zakat payments affecting your ability to repay the debt and in turn, put you in harms way. When a person is not in harms way at all by paying Zakat despite having debt, then the debt ought not to be deducted.

In principle, you may only deduct debts which have been incurred. Next month’s rent is not yet incurred nor demanded. Therefore, you cannot deduct this at present from your Zakat calculation.

Outstanding Capital Gains Tax can be deducted from one’s Zakatable assets even before HMRC inform you of the Tax due if you can work out the amount of Tax due.

Any money owed to the scheme can be deducted from one’s Zakatable assets value.

Child maintenance can be a requirement of shariah or a requirement of the law of the country.

If a person is required by shariah to provide child maintenance, then there are two possible scenarios:
1. From a legal perspective (i.e. decision made by the court) one is also required to pay: In this case, he can only deduct payments which have fallen in arrears and the current monthly payment which is due. But he cannot deduct future monthly payments as they are not demandable yet.

2. From a legal perspective he is not required to pay but he has come into an agreement with his partner to pay the maintenance: No amount can be deducted unless the current guardian of the child had to buy necessary items on credit for which the father is now responsible to repay.

If a person is not required by shariah to provide with child maintenance:
3. From a legal perspective he is required to pay: The same as point number 1 will be applicable.

4. From a legal perspective he is not required to pay but he has come into a friendly agreement to pay for maintenance: In this case he will not be able to deduct anything; including the cost of items bought on credit by the current guardian of the child.

Please approach your local scholar to find out whether you are required by shariah to provide for child maintenance.

As the need for those eligible to receive Zakat is increasing and such individuals have a right to the support of UK Zakat payers.

The four mainstream schools of Islamic jurisprudence are all in agreement that the payment of Zakat is due immediately upon become obligatory .

Zakat is an immediate obligation as Allah has instructed us to pay immediately in the following verse:
“And give its due on the day of its harvest.” (Quran 6:141)

Although this is referring to Zakat on crops, the overwhelming majority of scholars are unanimous that the same ruling applies to all forms of Zakat. Furthermore, Zakat is a monetary obligation to fulfil an immediate, pressing and urgent need. Hence, such a need can only be fulfilled when Zakat is paid immediately.

The wisdom behind this is to encourage people to increase in worship and capitalise on blessed times like Ramaḍan or the first ten days of Dhul Hijjah.

Once, al-Abbas came to the Prophet (May Allah bless him and grant him peace) and asked if he could pay Zakat in advance. The Prophet permitted him making an advance payment. (Sunan al-Tirmiẓi)

The scholars agree that one must have a Zakat anniversary and a yearly cycle in order to pay in advance. Whilst the Shafi’i school permit only one year’s payment in advance, the Hanafi school does not limit the years for which one can pay in advance.

However, if a person does pay Zakat in advance, it is necessary to recalculate Zakat on the actual Zakat anniversary to ensure the advance payment offsets the actual Zakat liability one had.

The Prophet was asked which fast is better after the fast of Ramaḍan, he said: the fast of Sha’bān to honour Ramadan. Then he was asked which charity is best, he said the charity that is given in Ramadan. (Sunan al-Tirmiẓī)

This Ḥadīth signifies the blessings of the month of Ramaḍan. Ramaḍan is a season wherein the rewards for good deeds are magnified. Many assume that Zakat is only paid in Ramaḍan. This is inaccurate. Zakat can be due at any time of the year; Zakat is binding on one’s Zakat anniversary. This can be at any time of the year.

To benefit from the above virtue in the Ḥadīth, one may pay Zakat in advance in Ramaḍan. However, it is incorrect to delay one’s Zakat payment until Ramaḍan and pat Zakat in arrears.

Tamlik is necessary in all four mainstream schools of jurisprudence.

Intention is being conscious of what one is doing. It is not necessary to verbalise an intention.

When giving Zakat, the intention of the individual should be based on fulfilling Allah’s commandments. Giving Zakat with pure and sincere intentions will ensure rewards in the hereafter; Sūrah Al-Baqarah (2:276) tells us that: “Allah will deprive usury of all blessing, but will give increase for deeds of charity: For He does not love the one who is ungrateful and wicked.”

Zakat is obligatory on each eligible person.

Every person is primarily required to pay their own Zakat. Hence, your wife will be primarily responsible to pay Zakat on her Zakatable assets such as gold and silver. However, you may pay Zakat on her behalf.

If a person pays Zakat in kind, he must ensure he valuates the assets correctly to cover his Zakat liability. Thus, a person may pay Zakat by giving their belongings such as a laptop, mobile phone etc., however, one must accurately determine the current market value of the item to ensure the Zakat liability is covered.

Zakat can be paid in kind according to the Hanafi school, whilst other schools either reject this entirely or allow it in some circumstances and not others or allow it with a degree of reprehensibility .

If a person pays Zakat in kind, he must ensure he valuates the assets correctly to cover his Zakat liability. Thus, a person may pay Zakat by giving their belongings such as a laptop, mobile phone etc., however, one must accurately determine the current market value of the item to ensure the Zakat liability is covered.

“Sadaqah (Zakat) is for the poor and for the needy and for those employed to collect [Zakat] and for bringing hearts together [for Islam] and for freeing captives [or slaves] and for those in debt and for the cause of Allah and for the [stranded] traveller – an obligation [imposed] by Allah. And Allah is Knowing and Wise.” (Quran 9:60)

The above verse singles out eight types of people deemed eligible to receive Zakat. They have been identified as:

1. Al-Fuqara’ (The poor)
2. Al-Masakin (The needy)
3. Al-‘Amilina ‘Alayha (Administrators of Zakat)
4. Al-Mu’allafah Qulubuhum (Reconciliation of Hearts)
5. Fir-Riqab (those in Bondage)
6. Al-Gharimin (Those in Debt)
7. Fi-Sabilillah (In the Cause of Allah)
8. Ibn al-Sabil (The Wayfarer)

“Sadaqah (Zakat) is for the poor and for the needy and for those employed to collect [Zakat] and for bringing hearts together [for Islam] and for freeing captives [or slaves] and for those in debt and for the cause of Allah and for the [stranded] traveller – an obligation [imposed] by Allah. And Allah is Knowing and Wise.” (Quran 9:60)

The above verse singles out eight types of people deemed eligible to receive Zakat. They have been identified as:

1. Al-Fuqara’ (The poor)
2. Al-Masakin (The needy)
3. Al-‘Amilina ‘Alayha (Administrators of Zakat)
4. Al-Mu’allafah Qulubuhum (Reconciliation of Hearts)
5. Fir-Riqab (those in Bondage)
6. Al-Gharimin (Those in Debt)
7. Fi-Sabilillah (In the Cause of Allah)
8. Ibn al-Sabil (The Wayfarer)

1. Poverty relief and economic empowerment – this incorporates the first (the poor), second (the needy), fifth (those in bondage), sixth (those in debt) and eighth (travellers in need) categories of Zakat.
2. Causes for Islam – this incorporates category four (those whose hearts need winning over) and category seven (for the cause of Allah) of Zakat distribution.
3. Zakat management – this incorporates category three (administrators of Zakat)

al-Fuqara are the first category mentioned in the Quran 9:60 as one of the eligible recipients of Zakat. Al-Fuqara literally means: the poor. This category is defined as those who are poor and require immediate relief and essentials.

Allah has mentioned two categories of al-Fuqara’ and al-Masakin, which are generally conflated and considered as one. But why has Allah mentioned two? What might we extrapolate considering the intent of Allah? On the face of it, defining both meta-categories according to the majority, the meta-category of al-Fuqara’ seeks to serve those in absolute poverty, those who find little to meet their daily requirements and establish the core essentials, helping them to achieve basic survival from day to day. It allows for a standard of living that subsequently facilitates the next stage, al-Masakin. Giving Zakat to the poor will not necessarily lift them out of relative poverty but seeks to overcome abject poverty so as to meet basic human needs and afford some level of stability, at least enough that will then lead to ways in which the deprived and socially excluded can access economic opportunities.
Poverty is the most common and widespread impediment. Thus, the meta-category of al-Fuqara’ first speaks to the importance of having basic human needs met, not only for raising GDP or resourcing capital, but also to facilitate Allah consciousness.

Needs considered under the Kifayah framework Food, clothing, accommodation, transport and utilities for applicant and his dependents.
If there are any other essentials required by an applicant, that can be considered on a case by case basis.
Eligible recipients under Kifayah:
1. The applicant has no funds for his needs
2. The applicant has insufficient funds for his and his dependents’ needs
3. The applicant has a job but not sufficient to cover his basic costs
4. The applicant has a source of income or someone providing for him but does not cover his costs
5. The applicant has some funds but insufficient for his needs
6. The applicant has insufficient funds to cover his necessary expenses for the forthcoming year.

The Maliki, Shafi’i and Hanbali school differ in the timeframe to assess sufficiency. The Maliki and Hanbali school have a timeframe of one year. So, a needy person is he who does not currently own and possess sufficient essentials of life to get him through the next twelve months. The Shafi’i school have a broader understanding of sufficiency and consider life expectancy, geographical location and other variables when calculating what is sufficient for a person.

The Maliki, Shafi’i and Hanbali schools have not used the Zakat Nisab to distinguish between poverty and affluence, rather, they have made Kifāyah (sufficient provisions) the distinguishing factor. Therefore, whoever possesses sufficient wealth and assets for himself and his dependents is wealthy. Whoever does not own sufficient money and assets for himself and his dependents is poor.

The Hanbali school has a second opinion which states that if a person has the equivalent of 50 dirhams, he is considered wealthy even if it is not sufficient for him.

1. A person who has absolutely nothing in terms of wealth and assets is from the al-Masakin. Whereas, a person who has some wealth but less than sufficiency or less than Nisab is from the al-Fuqara’.
2. Those who have more than half of their essentials in terms of money and assets are regarded as al-Masakin. Whereas, those who own less than half are from al-Fuqara’.
3. Those whose economic state is worse than the needy .

In Bada’i al-Sana’i, Imam al-Kasani (d.587 H) states that the Zakat paid to the Amil is not purely Zakat, rather, it is an `imalah (commission) with a quasi-status; it is like Zakat from one angle and ‘Ujrah (wage) from another angle. In al-Jawharah al-Nayyirah, Imam al-Zabidi (d.800 H) has reiterated the same understanding. Due to the wages (‘Imalah) having a legal (hukmi) angle of Zakat in it, Imam al-Shurunbulali states that a Hashimi (family member of the dear Prophet) cannot take this directly. Likewise, from the other angle of it being like a wage, it is permissible for a wealthy person to receive it. The commission was not entirely a wage nor a salary as the hours and amount received were unknown and thus could not be a valid Ijarah contract. The pay was dependent on what was collected and the services rendered. The payment was a commission from the Fuqara’ to Al-‘Amilina ‘Alayha. Upon the Amil taking possession, Zakat was paid and discharged from the payers’ liability. Thereafter, the ‘Amil took his commission as an ‘Imalah and not directly as pure Zakat as mentioned by Imam al-Shurunbulali. Hence, Imam al-Kharkhi (d.340 H), Imam al-Tahawi (d.321 H) and Imam al-Jassas (d.370 H) state that the commission has an element (shubhah) of Zakat as the commission is taken from the Zakat funds, and the shubhah is only treated as reality (haqiqah) in respect to a Hashimi.

The ‘Amilina ‘Alayha were paid from the Zakat funds because they occupied themselves to serve the Fuqara’, hence, they deserved to be paid for the service they are providing. It was a payment from the wealth collected for the Fuqara’ to the ‘Amilina ‘Alayha as they provided them this core and vital service.
The above demonstrates that the real relationship exists between the ‘Amilina ‘Alayha and the Fuqara’ they represent and serve. If an organisation can construct a similar relationship in today’s context without an Imam, the service providers can potentially be ‘Amilina ‘Alayha.

1. Slaves whose freedom was conditional on a payment.

The slaves were required to buy themselves out of slavery by paying their master an agreed amount. Zakat was used to assist such Muslim slaves to pay off the debt owed to the master .

2. Normal slaves

Some scholars permitted the purchasing of normal slaves outright from Zakat funds. In order to free them from Slavery.

3. A Muslim prisoner

The Hanbali school have expressly permitted the paying of Zakat to help free Muslim inmates and captives .

Contemporary scholars have debated contemporary applications of this category of Zakat. The idea is that this category revolves around physical constraints which prevent freedom for individuals. Modern slavery and human trafficking are two contemporary examples of this category.

Imam al-Babirti (d.786 AH) stated the following types of people as beneficiaries:
1. Those who were inclined to accepting Islam.
2. Those who opposed Muslims and were considered a threat.
3. Those who had just embraced Islam70.

Ibn Qudama (d.620 AH) described the beneficiaries of this meta-category as follows:

1. Muslims
a. Muslim leaders whose faith was shaky could be given zakat in this meta-category. Such individuals may have great influence on Muslims, and giving to them generously could strengthen their faith and commitment. An example is the Makkans who were given generously by the Prophet ` after the battle of Hunain.
b. Prominent Muslims whose social status was respected by those who were not Muslim who have status in their own communities. It is considered that Sayyiduna Abu Bakr’s giving to Adi bin Hatim and al Zibriqan bin Badr, who were obviously committed Muslims, was of this nature.
c. Muslims who strove to defend Muslims against hostile narratives.
d. Muslims whose influence was needed in the Zakat collecting process to persuade others to pay their Zakat. This was a soft approach to change hearts and minds.

2. Those of other faiths or none
a. Individuals who were close to becoming Muslims, or whose clans may have become Muslim.
b. Those who may have done harm to Muslims, to whom giving Zakat would stop them from hurting Muslims. Ibn ‘Abbas narrates that certain people came to the Prophet who, if they were given Sadaqat, would praise Islam and declare it a good religion but, if they were not, would malign Islam.
Imam al-Nawawi (d.676 AH) describes al-Mu’allafati Qulubuhum with similar beneficiaries in al-Majmu’.

This analysis of the term Fi-Sabilillah by Ibn al-Athir (d.630 AH) shows two important points:
1. The term originally means every action intended solely to serve the cause of Allah, including all good deeds, individual and collective.
2. The term is commonly understood to mean striving for the sake of Allah, since the frequency of its usage would suggest a restricted meaning of striving for the sake of Allah

The Maliki and Shafi’i school state that a husband cannot give Zakat to his wife as he must financially maintain her with other funds.

The Maliki and Shafi’i scholars prohibit giving Zakat to all those people whom the Zakat payer is obliged to maintain financially. This includes parents and children.

The Maliki and Shafi’i scholars prohibit giving Zakat to all those people whom the Zakat payer is obliged to maintain financially. This includes parents and children.

• As a teenager, you may have had enough money in your bank account to warrant paying Zakat but not thought about it.
• As a student at university or upon graduation, you may have incorrectly assumed that you didn’t have to pay Zakat due to having a student loan.
• You may have been unsure whether to pay Zakat on jewellery or not.
• You may not have distinguished between personal and business assets correctly.
• You may have been confused about paying Zakat on your pension.
• You and your spouse may have been calculating Zakat as a couple rather than individually.

The amount to be disbursed in the previous years has become a debt in one’s liability on the day Zakat was binding. Thus, the outstanding amount due on each year’s Zakat day must be paid.

One should try to calculate as precise and accurate as possible. To get a precise figure, one can look at previous bank statements, wage slips, invoices, receivables and other documentation related to investments.

• Forgetting Zakat altogether
• Miscalculating Zakat and as a result not paying at all or paying less than what was due
• Being lazy and missing Zakat
• Saving money to purchase something deemed important

The Hanafi school opines that missed Zakat will not be paid from the estate unless the deceased had bequeathed the payment of Zakat. If he did enumerate missed Zakat in his bequest, Zakat will be paid from one-third of his estate after deducting funeral costs and liabilities.

Once a command of Allah applies to a person, to delay without any genuine justification is regarded as a sin.

Imam Al-Nawawi (may Allah have mercy on him) said: “Our scholars (the Shafi’I scholars) agree that when Zakat becomes binding upon an individual who has ability to pay, he must give immediately. Delaying the payment of Zakat will make him sinful. This is also the view of Imam Malik, Imam Ahmad and the majority of scholars. Our evidence is the words of Allah, may He be exalted:
“And give Zakat” (Qur’an 2:43). This command implies that is to be paid immediately. (al-Majmu’ Sharh al-Muhadhdhab 5/335)

The obligation of Zakat according to the Hanafi School is originally upon the wealth but is transferred onto an individual upon exhausting his wealth. Whereas, the other schools of Fiqh opine that the obligation of Zakat is vested on an individual from the outset. Thus, it remains obligatory.

• Adult (have reached puberty)
• Muslim
• Sane
• In complete ownership of the Nisab (Add link for info)

Please note, the three schools of thought other than the Hanafi school state that Zakat should be paid on qualifying wealth owned by the insane and children.

For example, the Nisab was £200 and on the Zakat anniversary, Musa had £200. A day later, a spontaneous fire burnt the £200 worth of notes he had. In such a scenario, since the actual Nisab he held has been destroyed without his wrong doing, foul play or without spending, the Zakat liability will drop completely as the actual Nisab and savings is no longer present.

This ruling is according to the Hanafi school who opine that Zakat liability is initially on the actual wealth itself rather than the liability of a person. Only after using the funds does the Zakat liability move onto oneself from the wealth. Thereafter, the Zakat remains a debt on the person.

However, according to the majority of schools of Fiqh, namely, the Maliki, Shafi’i and Hanbali schools, the Zakat liability is upon the individual from the outset. Therefore, a missed Zakat payment will not be written off upon the destruction of wealth on condition one had the ability to pay and did not paid.

One should try to calculate as precise and accurate as possible. To get a precise figure, one can look at previous bank statements, wage slips, invoices, receivables and other documentation related to investments.

To obtain a Step by Step guide on calculating missed Zakat, visit https://zakat.ch/take-action/calculate-zakat/

The amount to be disbursed in the previous years has become a debt in one’s liability on the day Zakat was binding. Thus, the outstanding amount due on each year’s Zakat day must be paid.

If you cannot remember the date you first became owner of the Nisab, then the date should be estimated. If this is not possible, then a specific Islamic date should be selected arbitrarily and adhered to annually.

Money acquired unlawfully belongs lawfully to the owners of the wealth. If they cannot be traced, one must dispense of such wealth in charity as that amount is not lawfully yours. Therefore, unlawful wealth is a liability which must be dispensed and will be deductible from one’s Zakatable assets for the missed year.

Money acquired unlawfully belongs lawfully to the owners of the wealth. If they cannot be traced, one must dispense of such wealth in charity as that amount is not lawfully yours. Therefore, unlawful wealth is a liability which must be dispensed and will be deductible from one’s Zakatable assets for the missed year.

In addition, it is necessary to write in your will that you have outstanding Zakat. It will be obligatory on the executor of the will to comply with this bequest. This bequest will be fulfilled from one-third of the estate after burial costs and debts as per the Hanafi school of Jurisprudence.

The Maliki, Shafi’i and Hanbali Schools of Jurisprudence state that a Zakat debt will be paid from the estate even if the deceased person did not bequeath it.

Please note the three schools of thought other than the Hanafi school state that Zakat should be paid on qualifying wealth owned by the insane and minor children.

The Hanafi school opines that missed Zakat will not be paid from the estate unless the deceased had bequeathed the payment of Zakat. If he did enumerate missed Zakat in his bequest, Zakat will be paid from one-third of his estate after deducting funeral costs and liabilities.

Current debt does not absolve one from missed Zakat from previous years. However, current debt will prevent the obligation of Zakat for this year. Current debt will not uplift missed Zakat of previous years as a person was capable to pay at that time. Thus, the obligation became vested in a person’s liability and remains until it is paid.

Inflation is not considered in Shariah based upon the following narration:

Abu Sa’id al-Khudri and Abu Huraira (Allah be pleased with them) narrate that the Messenger of Allah (Allah bless him & give him peace) appointed a person as a governor of Khaybar. This governor brought to the Prophet (Allah bless him & give him peace) high quality dates of Khaybar. The Messenger of Allah (Allah be pleased with them) asked: “Are all the dates of Khaybar like this?” He replied: “By Allah, no, O Messenger of Allah! We barter one measures (sa`) of this type of dates for two measures (sa`) of our own (normal & inferior quality) dates, and two measures (sa`)’s for three of ours. The Messenger of Allah said: “Do not do so (as this will be considered usury). Rather, sell the dates of inferior quality, and then buy the good quality dates with that money.” (Recorded by Imam al-Bukhari and Imam Muslim)

The Islamic jurists and Hadith commentators have explained that the above narration is clear evidence on the fact that when dealing in usurious goods, the similarity which is required is in quantity or equal units and not merely value. Therefore, one has to pay identical amount for missed Zakat in terms of units and numbers not value.

Missed Zakat is treated as a liability which needs to be paid off immediately, hence, it is deductible.

The ideal situation would be to pay the missed Zakat from now in small amounts in instalments in a manner that will not affect the debt payment.

The ideal situation would be to pay the missed Zakat from now in small amounts in instalments in a manner that will not affect the debt payment.

You may visit the following link to help calculate the value of your gold:
https://www.bullionbypost.co.uk/gold-price/gold-price-per-gram/