What is Zakat?
Zakat (زكاة) is one of the Five Pillars of Islam — an obligatory annual payment on wealth above a minimum threshold (Nisab), distributed to those in need. The word "Zakat" literally means purification: it purifies your wealth and your soul.
Who Must Pay Zakat?
Zakat is obligatory on every Muslim who is an adult, of sound mind, and owns wealth above the Nisab for one complete lunar year (Hawl).
What is the Nisab?
The Nisab is the minimum amount of wealth before Zakat becomes compulsory:
- Gold Nisab: 87.48 grams of gold
- Silver Nisab: 612.36 grams of silver
Most scholars recommend using the silver Nisab for cash and savings, as it includes more people and is more widely applicable. Check the current silver price to determine your Nisab value in your currency.
What Assets are Zakatable?
- Cash & bank savings — 2.5%
- Gold & silver (including jewellery held as investment) — 2.5%
- Business inventory & trade stock — 2.5%
- Shares & investments — 2.5% of current market value
- Money owed to you (debts others owe you that are likely to be repaid) — 2.5%
- Agricultural produce — 5% (irrigated) or 10% (rain-fed)
Not zakatable: your primary home, personal car, clothing, furniture, or tools used for earning a livelihood.
Step-by-Step Calculation
- List all zakatable assets: cash + gold/silver value + stocks + business inventory + owed debts
- Subtract short-term liabilities (debts due within the next year)
- Check if the net total meets or exceeds the Nisab
- If yes, and you have held this amount for one lunar year, multiply by 2.5% — that is your Zakat
Example Calculation
Savings: £10,000 | Gold value: £2,000 | Stocks: £3,000 | Debts owed to you: £1,000 | Short-term debts you owe: £2,000
Total zakatable wealth: £10,000 + £2,000 + £3,000 + £1,000 − £2,000 = £14,000
Zakat due: £14,000 × 2.5% = £350
Who Receives Zakat?
The Quran (9:60) specifies eight categories: the poor, the needy, Zakat administrators, those whose hearts are to be reconciled, to free people from bondage, those in debt, in the cause of Allah, and stranded travellers.
Common Mistakes to Avoid
- Forgetting to include gold jewellery held as an asset
- Not checking the Hawl (one lunar year has passed)
- Deducting long-term debts (like mortgages) in full — only deduct what is due within the year
Use our free Zakat Calculator to calculate your exact amount in under 2 minutes. May Allah accept it from you.