An important part of the Muslim faith, Zakat is a compulsory act of charity that involves giving 2.5 per cent of one’s wealth each year to those in need. The third Pillar of Islam, it’s an act of worship and a form of self-purification. It’s said that the act of paying Zakat helps people to learn self-discipline and free themselves from the love of money, possessions and greed, and it encourages them to behave honestly.
You’re eligible to pay Zakat once you reach the Nisab threshold. This threshold is equal to the current price of 612 grams of silver or 87 grams of gold. However, as the charity Human Appeal UK notes, because the value of this amount of silver is currently much lower than that of gold, scholars generally advise people to calculate the Nisab threshold based on the value of silver. This means more people are eligible to pay it, which in turns means more money is given to good causes.
Assets you should include
If you meet this threshold and you’re keen to observe Zakat, you’ll need to know which assets it is payable on. Human Appeal states that you should pay it on precious metals (including ornaments and jewellery), money in your bank accounts, pensions, investment properties, stocks and shares, money you have lent to others (as long as you are confident you’ll be repaid), and business stock.
Things you should leave out
You don’t have to pay Zakat on your personal home, any cars you have for personal use, furniture and household goods that aren’t intended for trade purposes or jewellery that doesn’t contain precious stones or metals.
A difference of opinion on worn jewellery
It’s worth bearing in mind that there’s a difference of opinion when it comes to factoring worn jewellery into your Zakatable wealth. While some scholars suggest that because these things are personal items, they shouldn’t be taken into account, others state that they should. If you want further guidance on this, you can follow your madhab’s ruling or speak to your local scholar.
Once you know exactly how to calculate Zakat, you’ll need to decide what to donate your money to. Charities like Human Appeal run a range of projects in the UK and across the world helping those in need. You can find out more about its initiatives and get the latest on upcoming
Human Appeal events by visiting the organisation’s website.