Zakat

Posted on by adris

Zakah literally means to grow and to purify.

The Islamic definition of Zakah is to provide ownership of a portion of one’s wealth to a Muslim poor person (who isn’t a descendant of the Prophet Muhammad pbuh, your spouse, parent, or child) by the order of Allah.

Zakah is Fardh and is one of the 5 pillars of Islam. The purpose of Zakah is to help those in need, as well as purifying our wealth. It is also a form of gratitude to Allah for allowing us to grow our wealth.

There are many benefits of Zakat including:

  • Purifying and blessing our wealth
  • Purifying our hearts from stinginess, greed ad love of this world
  • Being a test of the truthfulness of our faith: do we love Allah more, or our money?
  • Thanking Allah for the blessings he has given us.
  • Helping the poor
  • Removing and envy, anger, and hatred the poor may have towards the rich
  • Reduces hoarding, unemployment, poverty, and chances of recession.
  • Leads to a fairer society.
  • Strengthens the Ummah

Zakah must be given by sane, Muslim adults who (1) own and (2) have easy access to (3) Zakatable wealth (4) which reaches the Nisab (5) after deducting debts and is (6) maintained for a full year.

  1. Own the wealth.

This means that the wealth must be in the person’s ownership. For example, if you receive child benefits, although the money is given because of the child, the government has made you the owner, so you will pay Zakat. However, if you collect money on your child’s behalf and is in a separate account, this money belongs to the child, and so there is no Zakat. It is easy to determine who is the owner by determining who bears the risk of loss, meaning if the wealth was lost, who would lose the money?

  1. Having easy access

This means that you must have easy access, so that you can increase it. So, if the Zakatable wealth isn’t easily accessible, Zakat won’t be paid on it. For example, if money is in an account that has been frozen by the bank, Zakat won’t be paid on this as one cannot access it. However, if wealth is in a bank overseas and is accessible through an agent etc., this is ease of access and so this money is Zakatable.

  1. Zakatable wealth

Zakatable wealth is defined as any wealth (that is owned by the individual, and they have easy access) and from which profit can be derived. This can include money, gold, and silver (including jewelry and utensils that that are at least 50% gold or silver), NOT precious stones or metals such as platinum or diamonds, merchandise as this can be resold, and livestock. Any other form of wealth is non Zakatable, even if it is not a necessity, such as cars, clothes, platinum, diamonds, sofas, houses, and anything bought without the intention of resale.

  1. Reaches the Nisab

Nisab means threshold. It is the value which if reached by the Zakatable wealth after deduction of debts, the person’s Zakat date has begun. For gold, the Nisab is 87,48 grams or its value. For silver, this is 612.36 grams or its value.

For most of us who have cash, gold, or silver etc., we will follow the value of silver.

So, if a person’s total Zakatable wealth is below the value of silver by the end of the Islamic year, they will not pay Zakat.

  1. After deducting debts

If someone has a debt, they can deduct this debt from the value of Zakatable wealth. For example, if Zakatable wealth is £10,000 and someone has a loan of £500, they can take this £500 away from the £10,000, making the Zakatable amount £9,500.

Examples of these debts are mortgages, personal loans, utility bills, outstanding salaries, and payable service fees.

  1. Maintained for a full Islamic year.

This means that when the person reaches the Nisab, to a full Islamic year later, they still have the Nisab, they must give zakat. For example, on the 20th of Ramadhan 1444 a person reaches the Nisab, and on the 20th of Ramadhan 1445 a person still has this Nisab, they must pay Zakat. This is regardless of whether or not throughout the year they didn’t have the Zakatable wealth.

 

There are several people that Zakah can be given to. However, it is important to remember that Zakat is providing ownership to a living person. Therefore, this cannot be given for services. Therefore, Zakat can be given to:

  1. A poor person
  2. A person in debt, even if this is an interest-based loan.
  3. Travelers, even if they have money at home but cannot access it.
  4. In the path of Allah, e.g., peaceful Da’wah
  5. Zakat collectors

Zakat CANNOT be given to:

  1. A rich person- anyone whose non Zakatable wealth beyond their personal needs after deducting debts reaches the Nisab.
  2. A non-Muslim
  3. Welfare projects such as building wells, building a Masjid etc., as there is no transfer of ownership.
  4. A child of someone with a rich father
  5. Hospitals as they aren’t living people.
  6. Madrassahs as they aren’t living people- HOWEVER, it can be given to poor students.
  7. A person’s spouse, parents, grandparents, great grandparents etc., children, grandchildren great-grandchildren etc.

However, Zakat can be given to aunts, uncles, siblings etc., and by giving to these family members, one will receive double reward, one for giving Zakat and one for helping family and strengthening family ties.

So, a person will calculate all their Zakatable wealth, deduct debts, then multiply this amount by 0.025 to calculate the amount of Zakat they must pay.

Important points:

An intention is needed when discharging Zakat.

The person you are giving Zakat does not need to know you are giving them Zakat, as long as you keep this in mind.

Zakat cannot be used to fulfill the debts of a deceased person, as they aren’t capable of becoming the owner.