Zakat Expert


I am making an enquiry on Zakat on stocks and shares. I have held them in an ISA for a few years, which have grown steadily every year, but not at a fixed rate. I know the value can go down as well as up. I get a 6 month statement to show me how much the shares have gone up and what they’re value is at present. Can you please advise me how to calculate my Zakat on my ISA?

If you are holding these shares as a long-term investment then Zakat is due on your proportionate ownership of the Zakatable assets of the companies in which you have invested. Normally this is done by finding out which stocks you own, how many shares you own and then using the company balance sheets to work out roughly what the Zakatable assets are in each firm. If it is difficult for you to determine this then simply take 25% of the current market value of your portfolio as a proxy for the Zakatable assets of the underlying companies and then pay 2.5% of this value.

e.g. if your portfolio is worth £10,000, take 25% which is £2,500 and then 2.5% of this which would be £62.50.

The increase and decrease in portfolio value is irrelevant – only the current value matters.


I invest my savings in a few managed funds i.e. the stocks / shares are managed by the fund professional rather than myself. I am unsure whether I should be paying Zakat each year on the capital value (and if so, whether it should be the initial amount invested or the new amount) or whether I should be paying Zakat on any profit made over the year?

If one’s prime intention when buying shares is with the intention to sell for capital gain then the entire market value of the shares is subject to Zakat on an annual basis. This is no different from a shopkeeper who buys fruit in order to sell it at a profit, for example.

If the prime intention is long-term investment, as an alternative way to store wealth, then Zakat is not due on the market value. This is what seems to be the case in your circumstance. However, there are two things that need to be considered:

1. Dividend income: any dividend income that is generated should simply be taken care of when one is factoring in the amount of cash held for Zakat purposes. If all dividend income is saved, then Zakat will be paid on all of it. If it is all spent or reinvested, then nothing to worry about here.

2. The underlying Zakatable assets of the companies in which you have shares: this sounds complicated but isn’t really. Business assets are intrinsically subject to Zakat, including cash, assets for sale, receivables etc. So the question is, if you hold shares in a certain business and if that business has assets that are intrinsically subject to Zakat and if the management of the company is not paying Zakat on those assets on behalf of the shareholders, then should you not at least pay the proportionate amount of Zakat for these assets in line with your shareholding? The answer is yes you should.

The next question is how does one determine the value of Zakatable assets in a listed company? The answer is that for a single stock/business, this is relatively easily calculated just by looking at the latest balance sheet.

If however someone cannot do this or if you own a portfolio that contains many companies, then we are advocating a rule of thumb based on our initial analysis as follows:

In order to make sure that you pay a proportionate amount of Zakat for the underlying assets of a company in which you have shares, calculate the market value of your holdings, then take 25% of this value and apply the 2.5% Zakat to this amount.

e.g. you have £10,000 of shares. Take 25%, i.e. £2,500 and pay Zakat of 2.5% = £62.50.


Please could you advise if I have ISA accounts and stocks and shares, do I pay Zakat on the portion I hold?

If you have an ISA with stocks and shares and you have no current plans to sell, then you need to pay Zakat on your proportionate holding of the Zakatable assets that exist within the companies in which you have shares. This might sound complicated so you can follow these steps:

1. Work out the market value for your holding.
2. Take 25% of this value.
3. Include this figure on the asset side of your calculation before applying 2.5% to all your assets.

This is a proxy rule of thumb to help you factor in your share of the Zakatable assets in the stocks you hold through your ISA.

If you are about to cash in on your ISA then the entire market value is subject to Zakat.


If I have been granted stock options by my company, and these stocks vest (i.e. mature) in 3 years’ time, do I start to pay Zakat on them even before they vest or after they vest and are now legally mine and transferred to my ownership?

There is no doubt that more research needs to take place in this area since little has been written by contemporary scholars on the matter.

If stock options have not vested, then it’s debated as to the Zakat treatment. Are there things that can happen that mean you might forfeit the right to those shares? If so, can it really be considered your wealth yet? Probably not so therefore one can conclude that Zakat is not due.

If you decide that it is more likely than not that your options will vest and you will come into possession of the underlying then, simply to be safe, one can pay Zakat on the options in the same way that one would do so on a long-term holding of shares. In this case one needs to make an approximation for one’s proportionate holding of the Zakatable assets in the underlying companies of the shareholdings. In order to approximate this, we are advocating a safe rule of thumb of taking 25% of the market value of the shares and then applying 2.5% to calculate Zakat due.

Just to reiterate though, not paying Zakat until the options are vested is a valid position.

Apologies this isn’t a conclusive answer since, as I said, these issues are still being debated by scholars. But insha’Allah there is enough here to explain some of the related issues and for you to make a decision on how to proceed.


What if you have shares without the intention to resell?

If you own shares for the purposes of long-term investment without intention to resell then Zakat is due on dividend income and the proportionate Zakatable assets within the company shares.


What if you have shares with the intention to sell?

If shares are bought to sell which normally means short-term then Zakāt is due on the total share value.


Do you have an example for equity investments?

One simple example is if Ali invested £10,000 in a bond that has been yielding 7% return based on interest, then Zakat is due only on the original investment (or principal value), subtracting any interest received.


Can I give away my interest?

The interest portion of your income can be given away to The National Zakat Foundation by inputting the amount on our Donation page under Riba (Interest).

Approved by Mufti Amjad 7th August 2023

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