3 EASY STEPS TO CALCULATING YOUR ZAKAT
STEP 1: Identify what you own. What are your Zakatable assets.
There are some possessions/types of wealth we own that we have to pay Zakat on and some we do not.
What are the zakatable wealth/assets? A) All cash is subject to Zakat, B)gold and silver (jewellery) is subject to Zakat, C) stocks and shares, D) any business investments (anything you buy and sell with the intention of business, E) money which you have given to others that you know you will get back, F)pensions (defined contribution schemes), G)if you purchased a flat, house just for earning rent (not to sell later), you pay Zakat on the rental income accumulated at your Zakat due date. Note, if you have spent some that’s fine. Zakat is a balanced sheet calculation. If you purchased a flat to sell later on for profit, you have to pay Zakat on the total value of your property at market rate at your Zakat due date, H) cattle/sheep and livestocks. This can be difficult to work out. Please call for further help.
Possessions/wealth we do not pay Zakat on:
A) All personal items except cash and gold and silver
B)the home that you live in
C) your car you drive – essentially anything that you own for your personal usage is not included in your Zakat calculations.
STEP 2: sum up the value of your deductible liabilities. What you owe.
A) any outstanding bills at your Zakat due date
B)All arrears and overdue payment
C) For long term debt – two options, you can deduct the 12 months payment, or the month’s payment at your Zakat date. I encourage the latter as well as number of other reliable scholars and muftis.
Items you can’t deduct:
A) unlawful income (like riba, you have to give it away without intending any reward and should keep away generally).
B)any debt which is payable more than 12 months (like a mortgage, you can’t deduct the whole amount).
STEP 3. Work out your net Zakatable asset figure.
Zakatable wealth – liabilities = net zakatble asset figure, if it’s above Nisab, pay 2.5% of that.
Zakatable assets = £10k
Total deductible liability = £5k
Total remaining: £5 (net Zakatable asset figure). If that net figure is above Nisab (which will most likely be for most people) you pay 2.5% of that as obligatory Zakat.
Sh A.Hasan (Zakat Specilaist)