For cash, savings, gold, silver, investments and business assets, the basic rule is:

When your net Zakatable wealth reaches the nisab threshold, you begin counting a hawl, or lunar year. If the relevant conditions are still met at the end of that period, Zakat becomes due, normally at 2.5% of your Zakatable wealth.

The rule sounds simple. Most confusion comes from three questions: which nisab to use, when the year begins and what happens as wealth rises or falls.

1. What nisab means

Nisab is the minimum amount of qualifying wealth that makes a person liable for Zakat.

The traditional thresholds are based on 20 dinars of gold or 200 dirhams of silver. UK Zakat organisations commonly express these as approximately 87.48 grams of gold or 612.36 grams of silver, then convert the metal value into pounds.

2. Gold or silver: which threshold should you use?

For example, a person may fall below the gold value but remain above the silver value. Under a silver-based calculation, their Zakat year may already have begun. Under a gold-based calculation, it may not have begun. This is why two calculators can give different answers even when the assets entered are the same.

Do not solve the difference by choosing whichever result is cheaper each year. Ask which view you are following and keep a note of it with your annual calculation.

Gold and silver no longer have the same value relationship they had historically. The two thresholds can therefore produce very different cash figures.

Many Hanafi scholars use the silver standard for cash and mixed assets. Some scholars prefer the gold standard in the modern context because they consider it a more realistic measure of surplus wealth. UK charity guidance also differs.

There is no benefit in switching between thresholds from year to year simply to produce the lowest payment. Follow the position of your school or a qualified scholar, and apply it consistently. If your holdings are entirely gold or entirely silver, ask for guidance specific to that asset.

3. What hawl means and when it starts

Hawl means the completion of a lunar year. For the relevant forms of wealth, your hawl begins when your net Zakatable wealth first reaches or exceeds nisab.

For example, if you first reach nisab on 10 Sha’ban, that becomes the beginning of your Zakat year. On 10 Sha’ban the following lunar year, you review what you own and calculate the amount due, provided the conditions of liability are met.

The hadith reported from Ali ibn Abi Talib states that when a person possesses 200 dirhams and a year passes, five dirhams are payable. It also mentions the gold threshold of 20 dinars.

(Sunan Abi Dawud 1573)

Five out of 200 is one-fortieth, or 2.5%.

You do not need to wait until Ramadan unless Ramadan is already your Zakat date. Many Muslims choose a Ramadan date for convenience and worship, but the obligation becomes due according to the Zakat year.

4. What happens when wealth changes during the year?

Income and balances rarely stay still for twelve months. You may receive salary, spend savings, buy investments or pay debts.

Under the common annual-date method, you do not start a separate year for every pound received. Once you have a Zakat date, you calculate the qualifying wealth in your possession on that date.

Schools differ over a temporary fall below nisab. In the Hanafi school, the key assessment for monetary wealth generally looks at the beginning and end of the year, provided the wealth does not disappear completely during it. In the Shafi’i and Hanbali schools, remaining at or above nisab through the year is generally required for this category, so a fall below can interrupt the hawl. Maliki details vary by asset and circumstance.

If your balance moved around nisab or fell to zero, obtain school-specific advice rather than guessing.

5. What to include on your Zakat date

A straightforward personal calculation may include:

• Cash at home and in bank accounts.
• Gold and silver that are Zakatable under the position you follow.
• The Zakatable value of shares and investments.
• Money owed to you that is expected to be repaid, subject to fiqh details.
• Business cash, saleable inventory and receivables for business owners.

You may deduct certain debts or liabilities according to the scholarly method you follow. The treatment of mortgages, long-term debt, pensions, shares and business assets can differ. Use a calculator with a stated methodology or ask a qualified adviser when these form a large part of your wealth.

6. Lunar and solar year calculations

The standard Zakat rate of 2.5% is based on a lunar year of about 354 days. If you deliberately calculate on a fixed Gregorian date every year, the solar year is longer. Some UK guidance therefore uses approximately 2.577% for a solar-year calculation.

The cleanest method is to keep a Hijri Zakat date and use 2.5%.

7. A simple example

Suppose your chosen nisab is £600 when you first hold £2,000 of net Zakatable wealth. Your hawl begins that day. One lunar year later, your calculation shows:

• Cash and savings: £4,000
• Zakatable investments: £2,000
• Deductible immediate liabilities under your method: £1,000
• Net Zakatable wealth: £5,000

At 2.5%, the Zakat due is £125.

The example explains the method, not every asset rule. Before paying, confirm your current nisab, calculation method, Zakat date and eligible deductions. Once Zakat is due, arrange payment without unnecessary delay.