Zakat on Gold

Zakat is the name for alms-giving within Islam, and is one of the five pillars of the Islamic faith. Zakat roughly translates as 'that which purifies', which refers to the promise of reward from God in the afterlife.

It is a social responsibility for all practicing Muslims to give Zakat in order to help those in need, and to distribute wealth fairly around the community. In this article we explain zakat on gold, and how much you might need to give.

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Paying Zakat

The amount of Zakat required to be given by a Muslim is derived from the value of their possessions. The current guidance is for 2.5% or 1/40 ^th of a person's wealth to be given on an annual basis.

Payment of zakat is usually taken in one lump sum, but it can be done in instalments. Often organisations will promote sponsoring an orphan as one method of doing this.

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Zakat donation

To be eligible to pay Zakat, you are first required to have passed a minimum threshold of wealth known as Nisab. Once the nisab threshold has been reached, a zakat payment is expected after a year of wealth above this level.

Eligibility requires a full 12 months of wealth above this minimum level, however Islamic groups do recommend consulting scholars and religious leaders for guidance in the event of brief dips below this level, in terms of potentially adjusting and paying a smaller sum as zakat.

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Zakat Gold

Gold and silver are popular investments – especially in times of economic uncertainty – and they are used as reliable baselines for determining the nisab threshold. Zakat payments are also expected to take any gold you own into account for your total wealth.

The charity 'Islamic Relief' states that there are two thresholds for nisab (as of March 22, 2023):

1. GOLD – 87.48 grams = £4,461.48

2. SILVER – 612.36 grams = £361.29

The value of precious metals changes on a minute-by-minute basis. At BullionByPost, we offer live and historical price charts sourced directly from the London Bullion Market itself to provide visitors with the most accurate pricing possible. You can view both the price of gold in grams, and the price of silver in grams.

Having two thresholds to choose between may be confusing, but as Muslimhands.org.uk says: “Most scholars favour the lower value as it means that more people can pay Zakat and therefore there are more beneficiaries.”

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Zakat al-Fitr

Zakat al-Fitr is traditionally given as a small charitable donation at the end of the Ramadan fasting, but some Muslims choose to give their annual zakat payment in full.

This specific alms obligation is used to help the poorest Muslims so they too can celebrate Eid al-Fitr with family and friends.

For reference, Eid al-Fitr 2024 is expected to take place on Tuesday 9th April.

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Zakat calculator

If you need help calculating how much you should be giving for zakat, please visit https://www.islamic-relief.org/zakat/zakat-calculator/.

This web tool will allow you put in figures for wealth and other asset ownership, and will work out how much you should be donating for your annual contribution.

If you need specific help with regards to calculations surrounding precious metals such as gold and silver, please feel free to call us on 0121 634 8060 or to email us at support@bullionbypost.co.uk.

Zakat being handed out to those in need in a Muslim community in Malaysia.

References:
This article was written with the help of information available at the websites listed below:

The National Zakat Foundation – https://nzf.org.uk/

Muslim Hands – muslimhands.org.uk

Islamic Relief – https://www.islamic-relief.org/

If you have any queries or suggestions about the content, please email support@bullionbypost.co.uk for assistance.