Zakat is the third pillar of Islam — an annual obligation on every Muslim whose wealth reaches the minimum threshold. Yet many of us were never taught how to actually work it out. Which assets count? What about debts? Does the mortgage matter? This guide walks through the full calculation in five clear steps, with worked examples, so you can pay your Zakat with confidence. If you prefer, our free online Zakat calculator does the maths for you.
Step 1 — List Your Zakatable Assets
Zakat is due on wealth that is held and can grow, not on the things you use in daily life. Include:
- Cash — in hand, in current and savings accounts, and in any currency.
- Gold and silver — jewellery, coins and bars. See our detailed guide to Zakat on gold.
- Business assets — stock and trade goods valued at today's selling price, plus business cash and receivables.
- Investments — shares, funds and crypto held as investments (use current market value).
- Money owed to you — loans to friends or family that you reasonably expect to be repaid.
- Committee / BC savings — money you have paid into a savings committee that will return to you.
You do not pay Zakat on your home, car, furniture, clothing, or tools and equipment used for work.
Step 2 — Deduct Debts That Are Due
Subtract debts and bills payable now: rent owed, utility bills, credit card balances, money you have borrowed, and instalments currently due. For long-term commitments such as a mortgage, most scholars advise deducting only the instalments due in the near term — not the entire outstanding balance — otherwise almost no homeowner would ever pay Zakat.
Step 3 — Compare Your Net Wealth With Nisab
Nisab is the minimum threshold at which Zakat becomes obligatory: 87.48 grams of gold or 612.36 grams of silver, measured by value. Because most people hold mixed wealth (cash plus some gold), many scholars advise using the silver Nisab, as it is lower and safer for the poor. Gold and silver prices move daily — our Zakat Nisab page shows the current threshold in PKR and GBP.
Step 4 — Confirm Your Hawl (Zakat Year)
Zakat falls due once your wealth has remained at or above Nisab for one full lunar year (a hawl, roughly 354 days). Most people fix a personal “Zakat anniversary” — often an Islamic date they can remember — and calculate on that same date every year. Read more in our guide to when Zakat is due.
Step 5 — Pay 2.5%
Multiply your net zakatable wealth by 2.5% (0.025). That is your Zakat. It must be given to eligible recipients — the eight categories named in the Qur'an — which is exactly how HBSMWA distributes it in Pakistan.
Worked Examples
Example 1 — Salaried professional (UK)
- Bank savings: £8,000
- Gold jewellery (wife's, if she is calculating jointly it is hers to pay): £0 for him
- Shares ISA: £4,000
- Credit card due: £500
Net zakatable wealth = £8,000 + £4,000 − £500 = £11,500. This is above Nisab, so Zakat = £11,500 × 2.5% = £287.50.
Example 2 — Shop owner (Pakistan)
- Cash and bank: PKR 300,000
- Shop stock at selling price: PKR 900,000
- Customers' credit reliably recoverable: PKR 100,000
- Supplier invoices due: PKR 200,000
Net zakatable wealth = 300,000 + 900,000 + 100,000 − 200,000 = PKR 1,100,000. Zakat = 1,100,000 × 2.5% = PKR 27,500.
Example 3 — Below Nisab
A student holds £250 in savings and no other assets. This is below the Nisab value, so no Zakat is due — though voluntary Sadaqah is always rewarded.
Common Mistakes to Avoid
- Skipping gold jewellery — in the Hanafi school, worn jewellery is zakatable.
- Calculating on income, not savings — Zakat is on what you hold at your anniversary date, not what you earned during the year.
- Deducting the whole mortgage — deduct only what is currently due.
- Waiting for Ramadan when your hawl completed earlier — Zakat is due when your hawl completes; delaying it without reason is discouraged.
- Forgetting business stock — traders must value stock at current selling price each year.
This guide reflects widely held scholarly positions and is for general education, not a personal fatwa. For unusual situations — pensions, complex investments, disputed debts — consult a qualified scholar.