Zakat or alms-tax, the third pillar of Islam, is the obligatory giving of ones wealth to those who are in need of it. It is a fixed 2.5% tax on one’s wealth, above a minimum threshold level called nisab. This includes gold, silver, cash, stocks, shares, investment property/rental income, pension cash-in value, business assets and agricultural assets. One must have this amount of wealth for a period of one lunar year (354 days) for zakat to become due on it. 

Another form of zakat which is obligatory is Fitrana. This is given in the month of Ramadan, before Eid al Fitr. This is an individual zakat due for every Muslim, young or old, rich or poor and not determined by a person’s wealth. It amounts to 3.5 kg of grain, or its equivalent cost, approximately £4-5. 

Spend in charity, O son of Adam, and I shall spend on you [Bukhari] 

Zakat is obligatory on those Muslims who have sufficient wealth above the nisab value. Voluntary charity (sadaqah) also has many blessings, both spiritual and worldly. 

The importance of zakat is highlighted in multiple ayahs within the Quran which link it with salah, “Establish the prayer and pay alms-tax.” 

 All provision is from Allah SWT. Therefore all that we have is His and should be spent in His way. Such charity helps to purify one’s wealth and one’s soul. It releases us from our love of money and other worldly possessions and protects us from greed and miserliness. 

Take from their wealth charity to purify and bless them [9:103] 

We use the wealth we have been blessed with to provide for and support those who are less fortunate. Funds are used to provide food and water, housing, schooling and to help people lift themselves out of poverty and be able to support themselves and their families. Thus zakat and sadaqah are important tools in helping to establish equality within the community. 

One who gives charitably will never be poor. Allah SWT mentions several times in the Quran that whosoever lends Him a righteous loan will have it multiplied many times. Not only that, charity expiates sins and averts calamities [Tirmidhi]. Being charitable connects us to Allah SWT and is an investment in our Hereafter. 

If you lend to Allah a good loan, He will multiply it for you and forgive you. For Allah is Most Appreciative, Most Forbearing [64:17] 

The nisab value was set by the Prophet Muhammad (pbuh) as equivalent to 87.48 g of gold and 612.36 g of silver. As these metals are not used as currency today, the nisab value is calculated using the current price of gold or silver. This equates to approximately £4685 for gold and £367 for silver at the current rate.

The total zakat due on one’s wealth is calculated by adding up the value of one’s assets (as listed above, does not include residential house or items used for daily living eg cars, household belongings) minus one’s liabilities (loans, immediate expenses due) and multiplying by 2.5%, if above the nisab value.

Surah Tawba describes those who are eligible to receive zakat [9:60]: 

• The poor. 
• The needy; those who are not obviously destitute but require support. 
• Zakat collectors, to help with administrative costs. 
• Poor and needy recently converted to or inclined towards Islam. 
• Slaves, in order to be freed. 
• Those in debt. 
• Those who are away from home striving in the path of Allah. 
• Travelers in need of financial assistance. 

• One should give sincerely in the cause of Allah SWT. 
• One should not boast or show off with their charity – it will not be accepted. To give in secrecy is best. 
• Zakat and sadaqah should come from halal (permissible) sources of money. 
• Charity begins at home – one’s extended family should be the first recipients if in need, followed by the local community and then others. 
• One’s immediate family (parents and children) are not beneficiaries of zakat as one already has a duty to provide and support them. 
• Charity removes sins and averts calamities [Tirmidhi]. 
• Charity will be a shade on the Day of Judgement [Tirmidhi]. 
• All of society benefits from the removal of poverty. 
• Charity purifies and improves one character, ridding one of negative traits such as greed and miserliness. 
• It brings a good feeling into ones heart for helping people more unfortunate. This positivity leads to increased charity. 
• It raises the rank of a believer. None of you believes until he loves for his brother what he loves for himself [Tirmidhi]. 
• Charitable giving brings one closer to Allah SWT. 

 Reprinted with permission from beneficialknowledge.co.uk