Zakat: Nisab & Hawl- the minimum threshold and elapse of a year

Nisab is the minimum exemption limit which a person’s wealth must reach to become Zakat liable or eligible. The minimum threshold has been set by the Prophet (pbuh) in authentic ahadith. The nisab for commercial merchandise is in concordance with gold and silver. As for agricultural harvest, cattle, storable crops, rikaz and kanz (minerals, marine products and stowed treasure) they differ.

The nisab for gold is 87.48 grams and for silver it is 612.36 grams (with slight variations among the schools). In today’s currency the monetary value is considered at the person’s Zakat due date. The recommended measure is the silver standard. In this way more people pay and receive Zakat. Today’s (Sat 11 May 2019 corresponding to 6th Ramadan 1440) silver Nisab rate in pound sterling is: £223.76.

How do I work out I am liable to pay Zakat?

If a person’s net Zakatable asset is equivalent or above Nisab Zakat is payable. This person is called sahib nisab or owner of nisab. If it is less then there is no Zakat on the person.

How do I know a person is Zakat eligible?

If a person’s net Zakatable asset figure is below the Nisab then they are Zakat eligible.

The three step calculation method: 1) value what you own, 2) deduct what you owe, 3) what remains is the net Zakatable asset figure which you pay 2.5%.

Example: Asset = £10k, liabilities = £5k, net Zakat figure remaining = £5k. The net figure is above today’s Nisab which is £223.76.

Zakat is payable on the £5k remaining. 2.5% of £5k would be £125.

Hawl – passing of a year

For one to become liable to pay Zakat, at least a year has to elapse on the wealth beginning from the date of their attainment. This passing of 1 year is calculated in reference to the lunar year and not the Gregorian calendar. This requirement is only for money and commercial merchandise etc. People living in the West tend not to have agricultural products etc. The focus here will be on the former. Those seeking clarity on the latter should contact separately. It must be remembered that many people living in the West do own agricultural and other Zakatable items back in their ancestral lands. It is important for them to consider them when calculating Zakat.

Zakat is like a balance sheet equation in accounting terms. In other words, when calculating Zakat a person considers what he or she owns at their Zakat due date. Not the date before or after. The wealth fluctuating during the course of the year is insignificant and not considered when calculating Zakat. It’s the passing of the year (lunar year) that makes the wealth subject to Zakat, rather than the property of wealth itself. To emphasise, a person who continues to acquire new wealth in addition to the base wealth which has reached Nisab and is thus subject to Zakat, no longer needs to wait for the elapse of a year on these possessions; on the contrary these increases need to be progressively included in the base wealth and calculated accordingly.

Example: if a person’s Zakat due date is the 6th of Ramadan every year, which is today, received, say, £10k a week ago, that £10k must be added in the Zakat calculation.

The Zakat payer waits 1 year when he or she becomes owner of Niab for the very first time. For example, if a person were to become owner of Nisab today for the very first time he or she does not pay Zakat now. One year should pass and this time next year, after calculating Zakat, if the wealth has reached the Nisab then Zakat is liable. If the wealth has not reached nisab then of course there is no Zakat to be paid. However, on that date every year zakat should be calculated without considering the fluctuations of wealth during the year.

Sheikh A.Hasan (Zakat Specialist)


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