Zakat is the third pillar of Islam — an annual 2.5% due on qualifying wealth — but modern wealth comes in forms the classical books never named: index funds, ISAs, workplace pensions, crypto. The principles, though, haven't changed. This guide explains when Zakat on investments is due, how much to pay, and exactly how to calculate it on shares, funds, pensions, crypto and business assets.
When is Zakat due, and how much?
Two conditions must be met before any Zakat is owed:
- Nisab — your total net zakatable wealth must be above the nisab threshold (the value of 87.48g of gold or 612.36g of silver; many scholars recommend the lower, silver-based figure so more wealth is purified).
- Hawl — that wealth must have stayed above nisab for one full lunar year (about 354 days).
If both are met, you pay 2.5% of your net zakatable wealth. You can work it all out with the Rizq Zakat Calculator, which covers each asset class below in your own currency.
Zakat on shares and funds
The treatment depends on your intention:
- Actively trading shares (buying to sell): they are trade goods, so Zakat is 2.5% of their full market value on your Zakat date.
- Long-term investing (holding for dividends and growth): many scholars allow you to pay Zakat only on the zakatable assets underlying the company — its cash and receivables, often estimated at around 25–30% of market value. Paying 2.5% on the full value is the simpler and more cautious option.
The same logic applies to ETFs and funds, looking through to what they hold.
Zakat on ISAs
An ISA is just a tax wrapper, so Zakat depends on what is inside it. A Cash ISA is zakatable in full like cash; a Stocks & Shares ISA follows the shares/funds rules above.
Zakat on pensions
Generally, Zakat is due on the portion of a pension you can realistically access and that is invested in zakatable assets. Treatment of funds you cannot yet withdraw varies between scholars; a widely-used cautious approach is to pay 2.5% on the accessible, zakatable portion each year rather than wait until retirement.
Zakat on crypto and digital assets
The majority view treats cryptocurrency held as wealth or for trade as zakatable property at 2.5% of its market value on your Zakat date. NFTs and real-world-asset (RWA) tokens held as trade assets follow the same logic. As always, the underlying total must be above nisab and have completed the hawl.
Zakat on business assets
Trading stock and inventory, plus money genuinely owed to you, are zakatable at 2.5%. Short-term debts you owe (due within the year) can typically be deducted from your zakatable wealth before applying the rate.
A simple way to calculate it
Add up the zakatable value of every asset above, subtract deductible short-term debts, and — if the result is above nisab and a lunar year has passed — multiply by 2.5%. The Zakat Calculator does this automatically across cash, gold, silver, shares, pensions, crypto and business assets. For complex situations, confirm with a qualified scholar.
Frequently asked questions
How much Zakat do you pay on investments?
2.5% of your net zakatable wealth, once it has stayed above the nisab threshold for one full lunar year (hawl). For investments, you pay 2.5% on the zakatable portion of their current market value.
Do you pay Zakat on shares held long term?
Yes. If you actively trade, it is 2.5% of full market value. If you hold long term for dividends and growth, many scholars allow paying 2.5% only on the zakatable assets underlying the company (often ~25–30% of value), though paying on full value is simpler and more cautious.
Is Zakat due on a pension?
Generally on the portion you can access and that is invested in zakatable assets. Funds you cannot yet withdraw are treated differently by different scholars; a common cautious approach is to pay on the accessible, zakatable portion each year.
Do you pay Zakat on cryptocurrency?
Yes. Crypto held as wealth or for trade is zakatable at 2.5% of market value on your Zakat date, provided your total wealth is above nisab and has completed the hawl.
