assalamualaikum everyone it's that time
of the year again
when the z word is on everyone's lips
yes i'm talking about zakat
look i know it can be scary and painful
and frankly time consuming
but in this video my aim is to take the
z
out of zagat see what i did there in
this video i'm going to explain to you
what zakat actually is
when you have to pay it what assets you
have to pay it on
the best place that you can calculate
zagat really painlessly
and also get a free portfolio health
check and finally
what are the key criteria that you
should look for
in a charity before you give them your
zagat
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zagat is the third pillar of islam and
is compulsory
upon every muslim that has assets
over a certain amount and we'll talk
about what that certain amount is in
just a second
you have to give 2.5 percent of your
wealth to charity
but zakat is not like any other charity
it is a very specific category in islam
that you have to give to eight specific
people and expert charities know what
those people are
and they will give to them but that's
why it's very important for you
when you're choosing the charity and
that you're choosing the donation
section
to choose the zagato box and not the
sadaka box or any other box
because that makes all the difference in
the world between your zagat being
accepted or not accepted
confusingly there's another thing
floating around called zakat al-fitr
also called sadhakatul that is something
completely different
that's the stuff that you know your
father made you pay that 20 quid before
your eid salah that's what that's all
about and we're not going to cover that
in this video
but i just wanted to flag to you that
that is out there and it's something
separate
you have to pay as a guard if you have
wealth above
the nisab threshold and you've been at
that threshold
or more for the entire year ibrahim
what's this
nisab threshold you talk about so the
nisab threshold
is a threshold that was set by process
back when he was around and it has gold
and silver as a two criteria that you
could potentially look at
the gold nisab threshold as of april
2021
is around three thousand four hundred
pound and the silver threshold
is 360 pounds or thereabouts but hang on
hang on
brian you've just given me two different
thresholds which one do i follow
so typically the scholars say that you
should follow the lower threshold 360
pounds
because that is a playing it safe and we
like to play it safe when it comes to
our religion
and b it is also encouraging more people
to give zakat and that's usually a good
thing
so 360 pounds is the number that you
should keep in mind and if you are going
above that
then you are going to be zagat eligible
you need to be paying attention and
doing the calculation this year you
don't actually have to pay your zakat in
ramadan
but a lot of people do do that because
of course in ramadan
every good deed is on turbo boost so if
you're going to pay as a card you might
as well get the maximum out of it
by doing it in ramadan top tip number
one you don't have to pay zagat
in bulk at the time of payment you can
set up a direct debit these days
and pay it over the course of the year
but you shouldn't extend it more than a
year you should make sure that it is
paid definitely
within that year
you definitely need to give zagat on the
following
cash foreign currencies and
gold and silver except if you wear that
gold and silver you don't have to pay
zagat on that
but the stuff that you're saving up and
is just in cold storage
you do have to pay zagath on that and
then there's the more complicated stuff
but don't worry before i dive in i want
to give you some hope before we descend
into this mad max world of complicated
zakat
and the hope is that in the section
following this one
i will explain to you one place where
you can work out your sakat completely
painlessly
and very very quickly without
necessarily needing to know
all of this jargon and all of this
technical stuff in your head but with
that
let's now descend into the pit of
complicated cigars
when it comes to your business you need
to pay as a guard on your cash in the
business
the receivables the money that's going
to be coming to you very shortly
and the works in progress if for example
you are a factory and you're making
things
you don't need to pay as a guard on your
fixed assets
and of course if you own a business 50
50 with a partner
then you only need to pay zakat on the
50 percent that you own
rather than the whole thing for stocks
if you are buying a stock to trade it
you're going to buy and sell it very
quickly
then you need to pay zagat on the full
amount if however you are buying to hold
then you need to work out the zagatable
assets
within that stock and you would find
that by looking at the annual accounts
and those regardable assets are the
things like the cash the receivables
and the works in progress as we
discussed in the business section
so for example let's say you buy a stock
for a hundred pounds
and you find out that thirty percent of
that is zakatible
so you now have to pay 2.5 percent
cigarette
on 30 pounds which comes to 0.75 pence
and that is the zagath done for that
stock if you hold a basket of stocks
or you hold a fund or a pension that is
invested in stocks and chairs
it's going to be very difficult to
calculate zakat on each of the shares
so you can take an approximation
approach where you take
25 percent of your holding and you pay
2.5 percent zakat on all of it
that way you save yourself a lot of very
very fiddly and sometimes
impossible calculation with property if
you are buying it to sell it and flip it
then you need to pay the guard on the
full
amount if however you are buying it to
rent out or you're buying it to live in
then you don't need to pay as a card on
that property
with crypto the jury's kind of still out
on exactly where we land with zagat
because it's such an emerging area
the play safe approach that most
scholars are taking at the moment
is just pays a guard on that full amount
2.5 percent on whatever you own in
crypto however
we do have some personal sympathies for
people who say that look
cryptocurrencies many of them are really
a digital asset as opposed to a currency
and therefore they are not really
regardable and maybe in the future we'll
do a video on this
but for now play it safe and probably
just pay the 2.5
on the full holding for debts that
people owe you
i.e money that's going to come back to
you very shortly in the next year or so
then you should pay zagat on that top
tip number two
if you have lots of outgoings coming out
especially in the next month or so for
example your rent
your bills various other things that you
owe people then you can deduct
all of that from your zagatable assets
so that will bring down your overalls of
god
this ramadan inshallah we're going to be
launching the ifg zagat calculator
and the idea for this came from all of
the years previously
where whenever we've calculated as a
card we've always felt
that with some of the calculators out
there you don't necessarily leave it
feeling that it's covered
absolutely everything so this calculator
that we designed
is very much informed by our investment
and business backgrounds
to make sure that everything is actually
in fact covered and there's more
because we figured that look if you're
going to be giving all of this
information and putting down all of your
portfolio
and assets then why not give you a free
portfolio health check
that you can download and read and you
can find out some improvements and
suggested
ideas for investments that you can
consider that can help you in the long
run as well
so check it out the link is in the
description below
the first thing is don't just look for
how efficient a charity is
and whether or not it deducts any admin
fees or if it's a hundred percent
charity or not
in my sincere view that is not a really
good way of
thinking about charity islam the quran
says that you are allowed to give some
charity
to those who administer that charity and
the reason is very simple
because to run a proper operation that
is handling millions of pounds
you need to hire the right people you
need to make sure that you have the
right governance the right technology
the right infrastructure
and you know news flash that all costs
money
so i actually think that you should look
at how efficient that charity is
sure but also how effectively it
delivers that
with the money that it spends as well
rather than just focusing on 100
the other thing that you should watch
out for is that the charity should be
registered with the charities commission
and it should have reputable people
involved at the board level
and at the trustee level as well it is
ideal if a charity
is giving zakat locally so if a charity
is doing that
then you should give them a bit of
credit some brownie points for that as
well
if you're going to give internationally
then my view is that you need to give it
to a charity
that has the requisite infrastructure
and scale and the manpower and expertise
to be able to deliver that charity
in as effective a manner as possible in
all of the countries around the world
that it purports to give that charity to
if it's a small charity then
realistically
it's going to struggle to be able to do
it as efficiently or as effectively
as some of the bigger ones if you do
want to give to your extended family
perhaps if you've got family in
pakistan bangladesh india places like
that then feel free to give a portion of
your money
to them because charity is supposed to
start
from those who are nearest to you and
that you have the most responsibility
for a key thing to look out for in a
charity is look at where they've
previously spent their zakat money
and what they have said to you about it
how transparent they are
and how clearly they govern that zagat
allocation as well
really important point to look out for
with the ifg's regard calculator
we are working specifically with
national zagat foundation
and islamic relief and the reason why we
picked those two in particular
was because we think that they fit
really nicely on the criteria that we've
set out
so with nzf they are a local charity and
they have really high transparency
ratings and they're very focused on just
as a guard
and with islamic relief they are an old
charity they've got
really strong infrastructure a global
reach and lots of in-house expertise
and we think that's crucial to give
charity at scale in a global world that
we live in today
so that's it folks but in summary if
you've got assets over 360 pounds
then you need to be paying zagat on that
and you should definitely check out the
ifg's regard calculator
because it will make your life a lot
easier and get that money paid to some
really cool charities that we're working
with
until next time assalamualaikum