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What is Zakat? |
Paying zakat is Fard (compulsory). The Qur'an says that only those who pay zakat are in the "brotherhood of faith" (9:11). It also says that Zakat purifies assets and creates virtue (9:103).
Zakat is a 2.5% levy on most valuables and savings held for a full year if their total value is more than a basic minimum known as nisab. At present nisab is £700, or US$1,050 or an equivalent amount of any other currency.
The broad categories of zakatable assets are listed below. If you add their values, then subtract the values of your immediate debts (overdraft, credit card, etc., but not mortgage), you get your zakatable total. If this exceeds nisab, 2.5% of the full amount should be paid as zakat.
Zakatable assets
- Money: Cash money in your bank and building society accounts, and the release value of bonds, securities and shares.
- Gold and Silver: In any shape or form are zakatable if they are bought as investment. In Hanafi fiqh, this includes jewelry in everyday use.
- Property: There is no Zakat on family home or household furniture, carpets, car, etc. But if a property is bought as an investment, zakat is payable on the full current value or net quality. If a property is let, zakat is only payable on the rental income saved over a year. A mortgage is not a deductible debt as it is not an immediate debt.
- Business: If you own a shop, for example, there is no zakat on building, fixtures, fittings or vehicles used for trade. The working capital of a business, including current inventory is zakatable. Profits become zakatable if saved for a year.
FITRAH
Fitrah or zakat al-Fitr is a one-off due which must be
paid each year before Eid al-Fitr. It is a common fallacy that this should
be paid on the day of Eid before salat. It is paid by the head of
a family or household for each of his dependents including small children
or old men and women. Adult children with independent incomes must pay their
own fitrah, for themselves and their wives and children. The rate this year
is £2.50 per person and in the USA $5.00 per family member.
SADAQAH
Sadaqah is voluntary contribution fi sabil al-Allah. Sadaqah may be given
to mark and bring blessings at weddings, birthdays, wedding anniversaries,
death or death anniversary, success in exams or business or any other occasion
that makes you happy, sad or just grateful to Allah subhanu wa ta'ala. The
modern western practices of cutting cakes, giving parties or sending cards
or flowers is unproductive and often wasteful of scarce resources. Sadaqah
also helps to underpin the family's Muslim culture and Islamic values
- The Zakat Foundation Account No. 74620522
- The Fitrah Foundation Account No. 68984222
- The Sadaqah Foundation Account No. 56075022
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