The Comprehensive Guide to Calculating and Paying Zakat: Method, Nisab, and Giving to Relatives (2026)

Introduction

Every year, millions of Muslims across the globe fulfil one of the most vital pillars of Islam: Zakat. Whether you are a student, a salaried professional, or a business owner, calculating and paying your Zakat is not just an act of worship—it is a sacred financial obligation that purifies your wealth and uplifts entire communities.

Digital tools, such as the [Mercy Relief Zakat Calculator UK], have made this process clearer, safer, and easier than ever before.

The Wisdom Behind Zakat:

Purification of Wealth: Cleanses your earnings from any doubtful or impure aspects.

A Cure for Poverty and Unemployment: Provides direct financial relief to the needy.

Establishment of Social Solidarity: Solidifies the principle of mutual responsibility and community support (Takaful).

Support for Vulnerable Groups: Facilitates ethical wealth redistribution.

Zakat was prescribed to purify the soul and wealth, strengthen faith, establish solidarity and security in society, bring blessings, avert calamities, and attain the pleasure and reward of Allah.

Who is Required to Pay Zakat?

 Zakat is not mandatory for every Muslim. It only applies if the following conditions are met:

You must be a Muslim of sound mind.

You must have possessed wealth equal to or exceeding the Nisab threshold for a full lunar year (Hawl).

Your wealth must be 'productive' or 'growing' (such as cash, gold, savings, shares, and tradable business assets).

If these conditions are fulfilled, you must calculate and pay Zakat based on your total eligible assets.

Steps for Zakat Calculation:

While using the Mercy Relief   Zakat Calculator can significantly simplify the process, it is important to understand the fundamental calculation method.

1- Determine the Nisab Value

The Nisab is the minimum threshold of wealth that makes Zakat obligatory. It is based on the current market price of either 612.36 grams of silver or 87.48 grams of gold.

Zakat on Bank Savings

If you save a monthly amount, there are two common methods for calculating Zakat:

Method One: Gross Annual Calculation

You calculate the total amount of savings you possess when the Hawl (lunar year) is completed, and then pay Zakat on that total. This is the easiest and most commonly used method.

Method Two: Independent Hawl for Each Deposit

Each monthly deposit or payment has its own separate Hawl calculated. This is a more precise method, but it requires greater monitoring and effort.

However, the majority of scholars simplify the process by allowing the use of the first method due to its ease of application.

Zakat on Salaries (Wages)

Zakat is not immediately due on a salary upon receipt. Rather, it becomes due only on the portion that is saved if that portion meets the Nisab and a full Hawl has passed over it.

Example:

If you saved £5,000 during the year, and you had previous savings that had already met the Nisab, Zakat is due on the total accumulated amount at the completion of the Hawl.

Zakat on Gold

This is one of the most frequently asked subjects, especially since many women own gold for personal use (jewellery/ornaments).

Is Zakat due on Gold Used for Adornment?

Majority Opinion: Yes, Zakat is due on it if it reaches the Nisab.

Other Opinion: There is no Zakat on permissible jewellery intended for personal use.

The Safest and Most Recommended Approach: To pay Zakat on the gold to eliminate any difference of opinion.

Gold Nisab:

The Nisab for gold is 85 grams of pure gold.

Is Craftsmanship/Labour Cost Included in the Calculation?

No. Zakat is calculated on the raw value of the gold only, without adding the manufacturing or craftsmanship cost.

Zakat on Trade (Business Assets): How is it Calculated?

Zakat is due on goods and stock intended specifically for sale.

Method of Valuation

Assess the current market value of the inventory (typically the wholesale price).

Add any expected profits related to the goods when sold. (Note: The common scholarly view is to value stock at its selling price, but often the wholesale/cost price is used for caution, or just the current market value. I will simplify step 2 by focusing on the primary assets.)

Include all cash reserves linked to the business.

Deduct all trade-related debts that must be paid off within the current Hawl (lunar year).

Pay 2.5% of the net calculated figure.

Practical Example (Using the figures provided, assuming the currency is the Pound sterling in the original context, but maintaining the calculation structure):

Zakat-able Amount:

50,000 + 10,000 - 5,000 = 55,000

Zakat Due:

2.5% × 55,000 = £1,375

Who is Eligible to Receive Zakat? (Recipients of Zakat)

Zakat may only be distributed among the eight categories mentioned in the Holy Qur’an (Surah At-Tawbah 9:60):

“Indeed, Ṣadaqāt (Zakat) are for the poor, and the needy, and those employed to collect [Zakat], and those whose hearts are to be reconciled [to Islam], and for [freeing] slaves, and for those in debt, and for the cause of Allah, and for the traveller.”

Translating this into our contemporary reality, Zakat can go towards:

Orphans and widows.

Refugees and displaced families.

Individuals burdened by debt (the Ghaarimeen).

Students facing financial hardship.

Communities in crisis regions, such as Gaza, Yemen, and Syria.

The Spiritual Value Behind Paying Zakat

Far beyond the numbers and equations, Zakat carries a profound spiritual significance. It not only purifies wealth but also purifies the heart of the giver.

The Messenger of Allah {ﷺ} said:

"Wealth is not diminished by charity (Ṣadaqah)." (Sahih Muslim)

Paying Zakat connects you to the global Ummah and extends a hand of mercy to those forgotten on the fringes of society. When you consciously calculate and pay your Zakat, you build a sustainable chain of compassion that reflects the highest Islamic ethics.

Common Mistakes in Zakat Calculation

Even with the sincerest intentions, Muslims may sometimes make errors when calculating Zakat. The most common mistakes include:

• Forgetting to include foreign currencies or digital bank savings.

• Ignoring investment profits or the value of commercial inventory/stock.

• Using an incorrect Nisab value (failing to verify the daily gold/silver prices).

• Paying Zakat "when I can afford it" instead of adhering to the specifically determined Hijri date (Hawl).

• Donating to organisations that are not qualified Zakat recipients.

Pro Tip: Always use a trusted Zakat calculator, such as the one provided by Mercy Relief.

Where is Zakat Distributed?

Mercy Relief works diligently to ensure your Zakat reaches the most vulnerable and those in greatest need. They operate in crisis zones such as Yemen, Palestine, East Africa, India, Bangladesh, Lebanon, Syria, and Sudan. Zakat funds are utilised for:

• Emergency Aid

• Healthcare

• Clean Water Projects

• Funding bakeries (furns of goodness)

• Orphan sponsorship

Conditions for Zakat Becoming Mandatory (Wujūb):

The conditions for Zakat becoming mandatory (wujūb) are frequently asked about. They are as follows:

1. Islam (Must be a Muslim).

   
   
   

2. Freedom (The person must be free, not enslaved).

   
   
   

3. Attaining the Nisab (Possessing the minimum threshold of wealth).

   
   
   

4. Stable Ownership (The wealth must be fully and stably owned).

   
   
   

5. Passing of the Hawl (A full lunar year must have passed on the wealth).

   
   
   

6. The wealth is not tied to a debt that would reduce it below the Nisab.

   
   
   

Common Public Inquiries Regarding Zakat

Is it Permissible to Give Zakat to Relatives?

This question is frequently raised.

It is permissible to give Zakat to relatives, provided that:

• They are poor or needy.

• They are not individuals whose financial maintenance is already legally obligatory upon you (e.g., your parents, children).

It is permissible to give Zakat to:

• Brother

• Sister

• Paternal Uncle

• Paternal Aunt

• Maternal Uncle and Maternal Aunt

Giving to relatives is superior because it combines charity (Ṣadaqah) and maintaining the ties of kinship (Ṣilat ar-Raḥm).

Is it Permissible to Pay Zakat Electronically or Through Organisations/Charities?

Yes, provided the entity is trustworthy and ensures the Zakat is delivered to its rightful recipients.

It is also permissible to transfer Zakat via banks and digital wallets.

Common Zakat Mistakes to Watch Out For

Even sincere Muslims can make errors. Be vigilant regarding these common mistakes:

• Including craftsmanship/labour cost when calculating the value of gold.

• Forgetting to deduct eligible short-term debts (liabilities).

• Failing to document and track the Hawl (Zakat due dates).

• Confusing Zakat with voluntary charity (Ṣadaqah).

• Distributing Zakat funds to ineligible recipients (outside the eight categories).

Frequently Asked Questions (FAQ) about Zakat

1. What is Zakat and why is it obligatory?

    

Zakat is a mandatory financial duty that purifies wealth and achieves social solidarity (Takaful). A Muslim annually pays 2.5% of their wealth, once it reaches the Nisab, to help the poor and needy.

2. Who must pay Zakat?

    

Zakat is obligatory upon every Muslim who owns the Nisab amount of wealth, over which a full lunar year (Hawl) has passed, and whose wealth is productive or growing.

3. What is the Zakat Nisab?

    

The Nisab is the minimum threshold of wealth at which Zakat becomes mandatory. It is estimated by the value of 87.48 grams of gold or 612.36 grams of silver.

4. What assets is Zakat due on?

    

Zakat is paid on:

• Bank Savings

• Gold and Silver

• Shares and Investments

• Trade Goods (Inventory)

• Recoverable Debts

It is not due on a personal house, car, or essential daily needs.

5. How can I calculate Zakat easily?

    

Aggregate all your assets if they meet the Nisab, deduct your current liabilities/debts, and then multiply the net figure by 2.5%. You can use the digital Mercy Relief UK Zakat Calculator to simplify the process.

6. Is Zakat due on a salary (wage)?

    

It is not due on the salary directly upon receipt, but only on the portion that is saved, provided it reaches the Nisab and a Hawl has passed on it.

7. Is Zakat due on gold used for adornment (jewellery)?

    

The majority opinion says yes, if it reaches the Nisab. Some scholars exempt permissible jewellery intended for personal use. The safer route is to pay Zakat to avoid the difference of opinion.

8. How do I calculate Zakat on business assets/trade?

    

(Value of Stock) + (Expected Profits) + (Cash Reserves) – (Trade-related Debts) = Zakat-able Wealth. You then pay 2.5% of this figure.

9. To whom is Zakat given?

    

It is given to the eight categories mentioned in the Qur'an, including: the poor, the needy, the indebted (Ghaarimeen), the traveller, and those collecting it. In contemporary reality, this includes: orphans, refugees, students in need, and communities affected by crises.

10. Is it permissible to give Zakat to relatives?

     

Yes, provided they are poor and their financial maintenance is not obligatory upon you, such as: a brother, sister, paternal uncle, paternal aunt, maternal uncle, or maternal aunt. Giving to them is given priority as it combines charity and kinship.