How to Calculate Zakat

What Is Zakat?

Zakat is one of the Five Pillars of Islam and an obligatory act of worship. The word itself means purification and growth. By giving Zakat, a Muslim purifies their wealth, acknowledges that all blessings come from Allah, and directly supports those in need within their community.

Zakat is not charity in the ordinary sense — it is a defined obligation with specific rules about who must pay, how much to pay, what assets are subject to Zakat, and who may receive it. The obligation applies to every adult Muslim who holds wealth above the Nisab threshold for one full lunar year (approximately 355 days).

The Quran specifies eight categories of eligible Zakat recipients in Surah At-Tawbah (9:60): the poor, the needy, Zakat administrators, those whose hearts are to be reconciled, those in bondage, those in debt, those striving in the cause of Allah, and the stranded traveller.

What Is Nisab?

Nisab is the minimum amount of wealth a Muslim must hold before Zakat becomes obligatory. It acts as a threshold — wealth below Nisab is exempt from Zakat. Nisab is measured against two standards:

• Gold Nisab: 87.48 grams of pure gold. Multiply this by the current market price of gold to get the monetary value. At £63 per gram, the gold Nisab is approximately £5,511.
• Silver Nisab: 612.36 grams of pure silver. Multiply this by the current market price of silver. At £0.65 per gram, the silver Nisab is approximately £398.

The silver Nisab is considerably lower than the gold Nisab. Many scholars recommend using the silver Nisab because it allows more Zakat to flow to those in need. Other scholars prefer the gold Nisab as it represents a more substantial threshold. Our calculator supports both — you can select your preferred Nisab type.

Use our Nisab Calculator to see the current threshold values in your currency.

The Zakat Formula

Zakat is calculated using a straightforward formula:

1. Total Zakatable Assets = Cash + Gold + Silver + Investments + Business Assets + Crypto + Money Owed to You
2. Net Zakatable Assets = Total Zakatable Assets − Deductible Debts
3. If Net Zakatable Assets ≥ Nisab: Zakat = Net Zakatable Assets × 2.5%
4. If Net Zakatable Assets < Nisab: Zakat is not due

The 2.5% rate — known in Arabic as rub' al-'ushr, meaning a quarter of one-tenth — is derived from the hadith of the Prophet Muhammad (peace be upon him) and is the standard rate applied to gold, silver, cash, and trade goods.

Step-by-Step Zakat Calculation

Step 1: Add Up All Zakatable Assets

Begin by listing every asset that is subject to Zakat. Include the current market value of each:

• Cash and bank savings — All balances across current accounts, savings accounts, fixed deposits, cash ISAs, and physical cash held at home. Use the balance on your Zakat calculation date.
• Gold — The value of your gold holdings. Only the pure gold content counts: 24K = 100%, 22K = 91.67%, 21K = 87.5%, 18K = 75%. Multiply your gold weight by the current market price per gram. Use our Gold Zakat Calculator if you hold significant gold.
• Silver — Include silver jewellery, coins, and bars at their current market value.
• Business assets — Include inventory, stock held for sale, raw materials, and business cash. Fixed assets used to run the business (premises, equipment, vehicles) are generally not zakatable.
• Investments and stocks — Shares held for trading purposes are zakatable at their current market value. For long-term investment holdings, a common approach is to pay Zakat on the zakatable assets of the companies you invest in, proportional to your shareholding. For simplicity, many individual investors pay 2.5% on the full market value of their portfolio.
• Crypto assets — Cryptocurrency holdings at current market value. Many scholars now treat crypto as a zakatable digital asset.
• Money owed to you — Loans you have given to others that you expect will be repaid. If a loan is unlikely to be recovered, it may be excluded until actually received.

Step 2: Subtract Deductible Debts

From your total zakatable assets, subtract immediate debts and liabilities:

• Credit card balances due
• Personal loan instalments due within the current month
• Outstanding utility bills, rent, and council tax
• Short-term business loans
• Taxes owed that are due imminently

For mortgages, a common scholarly view is that only the upcoming monthly payment is deductible — not the entire outstanding mortgage balance. For student loans, different scholars hold different positions. You may wish to consult a qualified scholar if you have significant long-term debt.

The result after subtracting debts is your net zakatable assets.

Step 3: Compare Against Nisab

Check whether your net zakatable assets equal or exceed the Nisab threshold. If they are below Nisab, Zakat is not due this year. If they equal or exceed Nisab, proceed to the calculation.

You can use our Nisab Calculator to find the exact threshold in your currency based on current gold and silver prices.

Step 4: Calculate 2.5%

Multiply your net zakatable assets by 0.025 (2.5%):

Zakat = Net Zakatable Assets × 0.025

Step 5: Pay Your Zakat

Distribute your Zakat to eligible recipients from the eight categories mentioned in the Quran. You may pay directly to individuals you know are eligible, or through a registered charity that operates a Zakat-specific fund. Always verify that the organisation allocates Zakat correctly and does not mix it with general donations.

Keep a record of your calculation and payment. You can use the Print button on our calculator result page to save a copy for your reference.

Example Calculations

Example 1: Zakat on Savings and Gold

Ahmed has the following assets:

• Cash savings: £5,000
• Gold (100g of 22K, at £63/g): 100 × 0.9167 × £63 = £5,775
• Current account balance: £1,500
• Deductible debts (credit card): £800

Calculation:

• Total zakatable assets: £5,000 + £5,775 + £1,500 = £12,275
• Net zakatable assets: £12,275 − £800 = £11,475
• Gold Nisab (at £63/g): 87.48 × £63 = £5,511
• £11,475 > £5,511, so Zakat is due
• Zakat = £11,475 × 2.5% = £286.88

Example 2: Zakat on Savings Only (Below Nisab)

Fatima has the following assets:

• Cash savings: £2,000
• No other zakatable assets
• No deductible debts

Net zakatable assets: £2,000. This is below both the gold Nisab (£5,511) and the silver Nisab (£398). Using the silver Nisab, Zakat would be due — £2,000 × 2.5% = £50. This illustrates why many scholars recommend using the silver Nisab: more people qualify, and more Zakat reaches those in need.

Example 3: Zakat with Significant Debts

Yusuf has:

• Cash savings: £8,000
• Gold value: £3,000
• Investments: £4,000
• Immediate debts: £6,000 (personal loan + credit cards)

Calculation:

• Total zakatable assets: £8,000 + £3,000 + £4,000 = £15,000
• Net zakatable assets: £15,000 − £6,000 = £9,000
• £9,000 > gold Nisab of £5,511, so Zakat is due
• Zakat = £9,000 × 2.5% = £225.00

Common Mistakes When Calculating Zakat

• Forgetting to include all bank accounts. Check every account — current, savings, digital banks, premium bonds, and fixed deposits. A commonly missed account can result in underpaying Zakat.
• Using the wrong gold price or purity. Zakat applies to pure gold only. If your jewellery is 22K, only 91.67% of the weight counts. Always check the current market price per gram on your Zakat calculation date.
• Not deducting debts correctly. Only immediate debts are deductible. A common error is deducting the full mortgage balance instead of just the monthly payment due, which may lead to underpaying Zakat.
• Confusing the Zakat year with the calendar year. Zakat is due one lunar year (about 355 days) after your wealth first exceeded Nisab, not on 1 January or 1 Ramadan. Your personal Zakat anniversary date is unique.
• Ignoring business inventory. If you run a business, unsold stock and inventory are zakatable at market value. Fixed business equipment is not. This distinction is frequently overlooked.
• Paying without calculating. Some people give an approximate amount without proper calculation. Zakat is an obligation with defined rules. Taking the time to calculate accurately is part of fulfilling the obligation.

How to Choose Your Zakat Calculation Date

Your Zakat date is one lunar year from the day your wealth first exceeded the Nisab threshold. If you cannot remember the exact date, estimate to the best of your ability. Many Muslims choose a memorable date — the first day of Ramadan, the 15th of Sha'ban, or the anniversary of their first paycheque — and calculate Zakat on that date each year.

The key is consistency: pick a date and stick to it annually. If your wealth fluctuates during the year, the relevant value is the amount you hold on your Zakat calculation date, not the average or the peak.