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Zakah Guide


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Zakah Guide

  1. 1. Muslim HandsDonate your zakah today+44 (0)115 911 Brief Guide toTelephoneCall us direct on our Donations Line: Zakah+44 (0)115 911 7222Post148 Gregory Boulevard, Nottingham. NG7 5JE (UK)OnlineSecure online donations can be made at muslimhands.orgBankYou may transfer money direct to our Donations Account:Natwest BankSort Code: 60-11-33 Account No: 22820000Charity Registration No. 1105056 The Little Book of Two and a Half Percent
  2. 2. A beautiful act of worship Zakah benefits the person who receives it but also the person who gives it. We should be grateful for the opportunity to increase ourThe word ‘zakah’ denotes the amount of wealth righteous deeds through it.(usually 2.5%) a Muslim must pay to particularcategories of underprivileged people, if their Zakah purifies our heart, because it goesannual wealth exceeds a specific amount. against our selfish instincts to hoard wealth for ourselves. Whatever material comfort we haveZakah is the third pillar of Islam. Linguistically, it been given is a test for us. By paying zakah wemeans “to purify.” By paying zakah we purify our acknowledge that our wealth is not our own, butwealth by sharing it with others. a blessing to be shared.Zakah is neither a tax nor a charity, it is an Zakah ensures that the very poorest of societyobligation to fulfil, and something for which we are protected from hunger and insecurity andwill be accountable to Allah directly. the need for basic essentials. The giver embodies the spirit of social responsibility.
  3. 3. The nisab Every lunar yearEvery person who is sane, an adult (reached Your zakah year begins on the date that yourpuberty), Muslim and sahib-un-nisab must pay wealth first equals the nisab. Each year onzakah as a duty. To be a sahib-un-nisab means that date your zakah should be calculated. Ifyou possess more wealth than the level of nisab you can’t remember exactly when you becamefor a period of one lunar year or more. sahib-un-nisab then try your best to estimate it. Alternatively, many people choose to pay withinThe nisab — the minimum value of wealth one the month of Ramadan every year for the extramust possess for zakah to become payable — is blessings and so they don’t forget to pay eachdefined as 87.5g of pure gold or its equivalent lunar year. Note however this must be before avalue in money. year has passed otherwise zakah will be overdue.If you have zakah to calculate for agricultural land, You can also pay zakah in monthly instalments.livestock or any produce from a mine, the nisab Simply calculate your zakah, divide this by 12 andfor this is different and should be worked out set up a regular payment, specifying it as zakah.with an Islamic scholar. You can pay your zakah in monthly installments for the year ahead but not in arrears. Zakah is always paid on the balance of assets owned on the zakahable date, not on fluctuating amounts during the year or on the average.To find out the current monetary value of the nisab, or call +44 (0)115 911 7222.
  4. 4. Zakah is due on the following types of Shares and pensionswealth: Paying zakah on stock and merchandise is • Gold and silver, including ornaments or obligatory. If you have shares in a particular jewellery containing gold and/or silver company, paying zakah is obligatory on the • Cash held at home or in bank accounts current market value of the shares. If you • Stocks and shares owned directly or are considered as having ownership in the through investment funds company’s assets to the value of your share, then • Money lent to others you do not have to pay zakah on items that are • Business stock in trade and merchandise exempt from zakah (such as machinery, furniture • Agricultural produce and building). If you’re unable to obtain these • Livestock animals such as cows, details, then you should pay zakah on the current buffaloes, goats, sheep and camels market value of the whole share. • Produce of mines • Pensions Pensions received by an individual after • Property owned for investment purposes retirement are liable for zakah provided they are sahib-un-nisaab. Before retirement, an individual’s pension is not subject to zakah if the payment made to the pension policy is deducted from the salary at source, without passing into the hands of the individual. For voluntary contributions to pensions, please consult a scholar.If you qualify to pay zakah, it is also obligatory for you toperform the qurbani at the time of Eid al-Adha.
  5. 5. Your home and car Valuing jewelleryAll assets owned for personal use and used to Gold and silver in whichever form are alwaysmeet basic living expenses are exempt from subject to zakah. If metal items of personal usezakah except for cash and items made from gold have less than half their content as gold or silverand silver. This means your home and personal then they are not liable for are not liable for zakah. It is important to get jewellery accurately valuedIf you have a second property for investment at a professional jewellers to account for the purepurposes with the clear intention to keep it, it gold or silver content. When buying jewellery,is not subject to zakah, but any profit from rental ask for the gold and silver weight in grams to beincome is fully subject to zakah. marked on the receipt for future reference.If you have a second house for investment The market value of gold fluctuates. Whenpurposes with the clear intention to resell it at a calculating the value of your gold, you will needprofit, you must pay zakah on it as it is to know the current price of gold. This can beconsidered a “stock in trade”. The entire value found online at sites such as, fromof the property is subject to zakah. your local goldsmiths or by calling us.
  6. 6. Zakah for businessesZakah is also payable on business interestsas well as personal wealth. The amount of “Who is he that willzakah payable on a business will depend on the loan to Allah a beautifultype of business, the nature of the goods sold, loan, which Allah willprofitability, stock levels and other factors. double unto his credit and multiply manyIt is strongly recommended to get specialist times? It is Allah whoadvice on calculating the amount of zakah due. giveth (you) want orContact us and speak to our Zakah Team who plenty. And to him youwill be able to help you with your business zakah shall return”.calculations. Al-Baqarah 2:245Zakah can be due on a business even if thebusiness is not profitable or has debt obligations.Note that there can be tax advantages to makingzakah donations directly from your business.Speak to our Accounts Department for furtherinformation.Zakah is not payable on haram income (earned fromforbidden means) The entire value of haram incomemust be given in charity.
  7. 7. A case study of calculating zakah To help you work out how much zakah youMiss Khan owe, we’ve created an online calculator at:Assets Totals Gold Enter details such as • jewellery with pure gold @ 75g how much cash, gold, • current market rate = £18.34/g* silver, shares you own 75 x 18.34 = £1375.50 and find out how much Cash at bank £1300 zakah is payable. Shares £210 The zakah calculator is designed to cover TOTAL WEALTH £2885.50 relatively simple cases Nisab faced by individuals. If you 87.5g of gold x £18.34* = £1604.75 own a business or have questions about how to Miss Khan has more wealth than calculate your zakah then the nisab (she is sahib-un-nisab) please contact us. Zakah liability (2.5%) £2885.50 × 0.025 = £72.14 * Please check the current market rate when calculating your own zakah.
  8. 8. Who can receive zakah?In the Qur’an, surah 9, verse 60, the categories of At Muslim Hands we take the responsibilitypeople entitled to receive zakah are described: of handling zakah extremely seriously as we understand this is more than just charity: it is1. the poor - those who have no income worship.2. the needy - those who may have an income but it is below a minimum Zakah donations are handled with the greatest requirement care to ensure they reach eligible recipients3. employees of zakah - those who identify quickly and securely. the destitute and handle zakah4. sympathisers - those who might enter or Our latest projects are detailed online at who have already entered Islam and in our annual Feedback5. to free slaves Reports which you can order or view online.6. to relieve those in hardship under debt7. for the cause of Allah