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A 10-Point Guide to Paying Your Zakat This Ramadan

by in Ramadan on 2nd April, 2021

With Ramadan right around the corner, many of us will be making preparations and plans for fasting. But one crucial obligation we should not forget about is calculating the Zakat we owe for the year. To refresh your knowledge of one of the most important aspects of Islam, we have compiled a short guide that will answer your most pressing questions about Zakat.

This post is sponsored* by The National Zakat Foundation (NZF). NZF receives your Zakat and distributes it to thousands of Muslims in need across the UK. They also offer free one-to-one consultation sessions with one of their Zakat experts.

The opinions presented in this article are that of NZF and have been approved by a religious authority.

1. What is Zakat

Zakat is the third of Islam’s five pillars; it comes after the Shahadah (belief in Allah and His Messenger) and Salah (the five obligatory prayers) and before fasting and Hajj. The word Zakat means “that which purifies”. It is an obligatory payment on wealth that Allah has decreed as a purification for Muslims. The word Zakat is often inaccurately translated to ‘charity’, but Zakat and Sadaqa are two separate concepts; Zakat is a religious obligation while Sadaqa is a voluntary good deed.

Zakat can be described as a social welfare system unique to Islam as the funds are meant specifically for those in need. It is mentioned a number of times in the Qu’ran…

“And keep up the prayer, give Zakat, and obey the Messenger, so that you may be given mercy.” (Qu’ran 24:56)

“Keep up the prayer and pay Zakat. Whatever good you store up for yourselves, you will find it with God: He sees everything you do.” (Qu’ran 2:110)

“True piety is this: to believe in God, and the Last Day, the Angels, the Book, and the Prophets, to give of one’s substance, however cherished, to kinsmen, and orphans, the needy, the traveler, beggars, and to ransom the slave, to perform the prayer, to pay the zakat.” (Qu’ran 2:177)

 2. Should you be paying Zakat?

It can often be confusing to figure out whether you should be paying Zakat or not. Zakat should only be paid by adult Muslims who are of sound mind and who also have a minimum amount of extra wealth (called Nisab) which has been saved over a year. If you are an adult Muslims who is of sound mind but you do not have Nisab then you are not obliged to pay Zakat.

In addition to the two conditions mentioned above, certain criteria must also be met for Zakat to be obligatory on wealth:

  • You must have complete ownership of the wealth you intend to give Zakat with
  • The wealth must have the ability to grow and increase
  • The wealth has reached the Nisab and a whole lunar year called ‘Hawl’ (a ‘Hawl’ or lunar year is 354 or 355 days long) has passed after possessing the Nisab

3. The different types of Zakat 

Just as there are many types of charity, there are also different types of Zakat. It’s important to understand what these different forms are and their meaning so that we can give intentionally and ensure that our money reaches those that need it most. There are two main types of Zakat:

  • Zakat Al-Maal: is Zakat on wealth. It is due when your wealth has exceeded the Nisab threshold for one full Islamic year (you will often see this being referred to as ‘Hawl’ which just means one lunar year). It can be paid any time of the year, but most people leave it for the month of Ramadan as good deeds during this time result in a multiplication of rewards and blessings.
  • Zakat Al-Fitr: The Zakat due after breaking the fast of Ramadan is a charity given to the needy at the end of Ramadan but before the Eid prayer. Zakat Al Fitr is obligatory on every Muslim who has enough to sustain themselves for one whole day and is paid by the head of the household for each member of their family. The amount to be paid per person is typically the cost of a single meal.

Read more: A Step-by-Step Guide To Paying Zakat Al Fitr

4. How can you calculate your Zakat?

There are two Nisab values, set by Prophet Muhammad ﷺ  himself: 

  • Gold: the monetary value of 87.48 grams of gold
  • Silver: the monetary value of 612.36 grams of silver

To calculate your Zakat payment for the year, check the current gold and silver market rate in your currency. The National Zakat Foundation updates its page daily with the current Nisab rate of both gold and silver. It is more common to use the value of silver as this results in more people eligible to pay Zakat, and more people in need can receive it. 

National Zakat Foundation also explains four simple ways to calculate your Zakat

  • Work out what you own
  • Then take off what you owe e.g Debts which need to be fully paid off within 12 months, up to 12 months of instalments for longer-term debts which are due to be repaid over several years, arrears and/or overdue payments
  • Work out the balance and check that it’s more than the Nisab value
  • Work out 2.5% of that, and there you go, you’ve got your Zakat amount

Use the step-by-step calculator available on their website to further calculate the amount you owe.

5. What is Zakat due on?

Zakat is calculated on your wealth, including personal assets and cash. As a general rule, the following are to be included in calculations: 

  • Cash
  • Saved funds
  • Stocks and shares
  • The value of any gold and silver that you own
  • The total value of any income generated from renting out an owned property
  • The value of any debt you have acquired that you expect to be returned 

Use the National Zakat Fund’s detailed Zakat Guides for a full list of what assets and funds Zakat is due on and what is not considered in calculations. Please note in the context of discussing Zakat, there is a difference of opinion on how some aspects of Zakat are calculated. The opinions presented in this article are that of NZF and have been approved by a religious authority.

6. When do you need to pay Zakat?

Your Zakat year will begin from the date your wealth first equaled or exceeded the Nisab rate. Zakat will be due when one lunar year has passed since your wealth equaled or exceeded the Nisab. The date will be used again in the following year as your “Zakat anniversary”.

If your wealth does not equal the Nisab rate after one year, you are not required to pay Zakat. Zakat is due immediately once you reach your Zakat anniversary. It may, however, be paid earlier.

As mentioned in the previous section, you are not required to pay Zakat Al-Maal in Ramadan but most people prefer to do so in order to reap the benefits of the blessed time. 

See more: NZF – When to pay Zakat

7. Can you pay Zakat monthly?

It is recommended to pay the entire amount of Zakat at once, as soon as it is due and not to delay unnecessarily.

The Messenger of Allah said: “Do not show lethargy or negligence in giving alms and charity till your last breath.” (Bukhari and Muslim)

However, we are permitted to divide the payments in instalments as long as it is in advance, and the balance is paid before the year is over. For further clarification, it is always best to consult your local imam. 

See more: NZF – Paying your Zakat Monthly

8. Who should you be giving your Zakat to?

In the Qu’ran, Allah mentions eight categories of people who are eligible to receive Zakat:

“Indeed, Zakat expenditures are only for

[1] the poor and

[2] the needy, and

[3] to those who work on [administering] it, and

[4] for bringing hearts together, and

[5] to [free] those in bondage, and

[6] for those in debt, and 

[7] for the cause of God, and

[8] for the stranded traveller. 

[This is] an obligation from God. God is All-Knowing, All-Wise.” (Qur’an 9:60)

See more: NZF – How Zakat Works

9. Can you give Zakat to family members?

To summarise, yes, you can give Zakat to family members that are in one of the above categories of eligibility and those that you are not already obligated to provide for. 

10. What if you miss your Zakat?

It is possible to miscalculate the amount owed or miss a payment altogether. In that case, the amount owed is to be paid immediately.

See more: NZF’s Missed Zakat Guide

If you need extra support calculating your Zakat, you can book a free one-to-one consultation with an NZF Zakat expert.

May Allah accept our fasting and our Zakat, and may our deeds be a shade for us on the Day of Judgement. Ameen

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Amaliah Team

Amaliah Team

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