At Muntada Aid we value the fact that by performing the ibadah of Zakat, along with Tawhid and establishing prayers (salah), a person not only becomes a member of the Muslim Community, at the same time he or she deserves brotherhood/sisterhood and allegiance of Muslims, as indicated in the holy Qur’an:
“If they turn in repentance and establish the prayer and pay Zakat, they are brothers in the deen” (Al-Qur’an 9:11).
Therefore, together with Tawhid and prayers Zakat is a means of social bonding, thus part of social responsibility. This is why at Muntada Aid, we are not only careful about the distribution of Zakat but at the same time we feel that it is our duty to help our donors through providing the right guidance about why and how to pay Zakat, so that they get full rewards from this act of ibadah. Therefore, we took time to provide you with the following Zakat Guidelines.
Welcome to Muntada Aid's Zakat guide
We have tried to answer all your questions about Zakat and offering advice and tool to work out how much Zakat you need to pay. While we’ve tried to provide as many answers as possible, for individual questions, however, we would recommend that you speak to your local imam or any scholar of your choice.
What is Zakat?
Zakat is the annual obligatory alms giving made by Muslims to support those most in need. It is one of the Five Pillars of Islam and is a key part of the Islamic faith. It has double significance in the life of a Muslim. On the one hand it is a means for spiritual purification, on the other hand it is a means of regaining social justice through establishing balance in social and economic life.
However, the fundamental spirit of Zakat is attaining the pleasure of Allah (SWT) by obeying His command to pay charity for those of His servants who are in need.
Who are Eligible for Zakat?
I. Who have to pay Zakat?
As per the rule of Islamic Sariah any person who fulfils the following criteria has to pay Zakat:
1) Adult (have reached the age of puberty)
2) Muslim (Zakat is not paid by non-Muslims)
3) Sane (Sound mind)
4) In complete ownership of the Nisab i.e. have total personal wealth higher than the nisab value.
ii. Who are eligible to receive Zakat?
The following verses of Qur’an has outlined about the recipients of Zakat in Surah Tawbah, V. 60 as follows:
“As-Sadaqat (Zakat) are only for the Fuqara' (poor), and Al-Masakin (the needy) and those employed to collect (Zakat funds); and for to attract the hearts of those who have been inclined (towards Islam); and to free the captives; and for those in debt; and for Allah's Cause, and for the wayfarer (a traveller who is cut off from everything); a duty imposed by Allah. And Allah is All-Knowing, All-Wise.”
Therefore, those who are eligible to receive assistance from Zakat payments the following eight categories of people:
1. (Fakir) The poor who have no or low income
2. (Miskin) The needy who do not have a day’s food
3. (Amil) Those employed to distribute Zakat
4. (Riqab) Anyone in slavery or captivity
5. (Gharmin) Anyone in unmanageable debt
6. (Fisabillillah) In the way of Allah (SWT)
7. (Ibnus Sabil) To assist stranded or struggling travellers
8. (Muallafatul Qulub) Those new to the Muslim faith or friends of the Muslim community
How do we distribute your Zakat?
We distribute your Zakat contributions to those in need, based on above categories. We have the following Zakat eligible projects: Little Hearts; Maternal Health; Cataract; Child sponsorship (Orphan and destitute); Education (for poor children) and Feed the Fasting. We also provide economic assistance for refugees and destitute people.
We have a system to keep your Zakat separate and dedicated staff to make sure that your Zakat is reaching to the right categories of people who are eligible to receive Zakat through our Zakat eligible projects. On the basis of category three listed above we charge a small administration cost for administering/managing the zakat efficiently, which is no more than one eighth of the amount.
What is Nisab?
The term Nisab is defined as the threshold amount that a Muslim’s wealth should total to make them eligible to pay Zakat. Gold and silver are the two values used to calculate the nisab threshold. The nisab is the value of 87.48 grams of gold or 612.36 grams of silver. Debts must be deducted from total assets before working out your eligible wealth and your Zakat percentage.
When Should I Pay Zakat?
Once your wealth has passed the Nisab threshold, you are eligible to pay Zakat. However, it is not paid straight away. Zakat should be paid after your wealth has been held for a full lunar year but only if the value remains above the minimum threshold amount.
Should your wealth increase or decrease, your Zakat amount should adjust accordingly, however, if your held assets fall below the Nisab threshold, you are no longer eligible to pay Zakat. The amount of Zakat due is calculated based on the value of personal wealth at the end of the Islamic year. Many Muslims choose to pay their Zakat during Ramadan as this offers greater blessings and rewards, although you can pay your Zakat at any time of year.
When talking about Nisab thresholds, you may also come across the term ‘Hawl’ which is the term used to describe the lunar year, the Islamic year or 354 days. The payment of Zakat is expected to be made once every Hawl after your wealth has crossed the Nisab threshold and has remained above the threshold for a full Islamic year.
How Much Zakat Do I Need to Pay?
Zakat should be calculated as follows:
• 2.5% on annual savings and personal wealth
• 5% on farmer's assets where crops are irrigated out of the farmer’s pocket
• 10% on farmer's assets where crops are irrigated by rain
• 20% on precious resources found on your property within the lunar year, such as oil, gold and silver
Assets and personal wealth must fall above the Nisab threshold in order to be included in the calculation.
What Needs to Be Included in My Zakat Calculation?
Zakat is calculated on your personal assets and held monies, although only on physical goods that do not contribute to comfortable day to day living. For example, you would only calculate Zakat on a second property, not the one you live in. The same with calculating Zakat on a vehicle - it is not due on the first but any additional cars must be included in your calculation.
Your assets are considered a total sum of the following:
• Cash in savings, either in the bank or at home
• Funds raised for special circumstances, i.e. wedding, hajj, property deposit
• Total value of owned gold and silver
• Total value of held shares at market value
• Total value of the stock you hold if you own or run a business
• Total value of rental income from owned property
• Any money in debt to you that you expect to see returned
Anyone who owns multiple properties should only include the gathered rental income and any profit at the time of sale towards their Zakat calculation.
The following is not considered in the Zakat calculation or are considered your liabilities:
• Personal items including clothing and appliances
• Money owed to others including card debts, mortgages and personal loans
• Rent or mortgage payment for the month you pay Zakat
• Bills that are outstanding in the month you pay Zakat
For business owners:
• Any business expenditures such as rates, salaries, bills and rent
• Short-term business loans or business overdrafts
To work out your total wealth there is a simple calculation you can use:
Personal or business assets less short-term liability equals your wealth.
Where your wealth is higher than the calculated Nisab threshold, you are eligible and expected to pay Zakat.
Can I Pay My Zakat in Instalments?
Zakat can be paid in instalments, however, it is preferred that your Zakat is paid in a single transaction. Where you are assured your wealth is not likely to change, you can pay your Zakat in advance of the anticipated due date.
What is Zakat-ul-Fitr (Fitrana)?
Zakat-ul-Fitr is different to the annual Zakat payment and is due before the end of Ramadan before Eid prayers.
The Zakat-ul-Fitr donation is traditionally given as food; at Muntada Aid, we make it easy to make your Fitrana Donation in cash to be donated to those less fortunate as necessary food products.
The amount was determined by The Prophet Muhammad (PBUH) as equivalent to one Saa’ or four Madd weight of food. One Madd works out to be the weight equal to how much of a staple food product can be scooped up in two hands together.
This is calculated in the UK at approximately £5 per person.
Zakat-ul-Fitr, or Fitrana, is paid by any adult Muslim who has food in excess of their dietary requirements and any individual can choose to pay their Zakat-ul-Fitr solely or on behalf of their dependents.
Calculating Your Zakat
If you would like to easily calculate the amount of Zakat you need to pay, please visit our Zakat Calculator.