Quick answer: Zakat on cash and savings is due once your net zakatable wealth reaches the value of nisab, the threshold the four schools express as 85 grams of gold or 595 grams of silver, and has stayed at or above that level for a full lunar year. The rate is 2.5%. Money that other people owe you is counted too, though the four schools do not fully agree on how and when.
What counts as cash and savings for zakat
Zakat on wealth (zakat al-mal) applies to money sitting in current accounts, savings accounts, cash kept at home, foreign currency, and money set aside for a future goal such as a house deposit or a pilgrimage fund. It is combined with any gold, silver, trade stock and zakatable receivables a person holds, rather than assessed account by account.
The basic test has three parts that all four schools accept: the wealth must be owned outright, it must reach nisab, and it must stay at or above nisab for a complete lunar year (hawl). None of this depends on where the money is kept or what currency it is in.
The nisab: gold and silver weights, not prices
Nisab is fixed in weight, not in pounds, dollars or euros. The classical figures, drawn from the Prophet’s ﷺ teaching on silver and gold thresholds, are commonly given as 85 grams of gold or 595 grams of silver. A hadith in Sahih al-Bukhari sets out the same idea for silver directly.
لَيْسَ فِيمَا دُونَ خَمْسَةِ أَوْسُقٍ مِنَ التَّمْرِ صَدَقَةٌ، وَلَيْسَ فِيمَا دُونَ خَمْسِ أَوَاقٍ مِنَ الْوَرِقِ صَدَقَةٌ، وَلَيْسَ فِيمَا دُونَ خَمْسِ ذَوْدٍ مِنَ الإِبِلِ صَدَقَةٌ
Narrated Abu Sa`id Al-Khudri:Allah's Messenger (ﷺ) said, "No Zakat is imposed on less than five Awsuq of dates; no Zakat is imposed on less than five Awaq of silver, and no Zakat is imposed on less than five camels
Because cash has no metal content of its own, a person measures it against whichever of the two weights their school or local scholar directs them to use, converting the weight into the current price of gold or silver on the date zakat falls due. This site does not quote market prices, since they change daily; check the current gold and silver price before you calculate, or use the zakat calculator, which updates automatically.
Scholars differ gently on which metal to use for mixed cash and savings. Sources summarising the Hanafi position note a preference for the silver standard (currently equivalent to around 595 grams) when assets are mixed, since it draws more people into zakat and so benefits the poor, while the Hanbali, Maliki and Shafi’i schools are commonly associated with the gold standard of 85 grams for this purpose. In practice, many Muslims in the UK, US, Canada, Australia and Europe are advised to use whichever threshold their own school or local scholar recommends, and to ask if unsure.
The 2.5% rate and the lunar year
The rate is 2.5% of zakat-applicable wealth, agreed across all four schools for most categories of zakat-applicable assets. The lunar year condition (hawl) means the wealth must sit at or above nisab for roughly 354 days. If the balance dips below nisab at any point during that year, the clock resets and a new hawl begins once the balance returns above the threshold.
Most people find it easier to fix one date each year, often a date in Ramadan, and check their total zakatable wealth on that date every year rather than tracking every fluctuation through the year.
Worked example: cash and savings together
Example. Suppose a person has £3,000 in a current account, £9,000 in a savings account, and £500 in cash at home on their chosen zakat date. That is £12,500 in total. Assume no gold or silver, and no debts to deduct.
If £12,500 is above whichever nisab the person follows, and it has stayed above that nisab for a full lunar year, zakat is due on the whole £12,500, not just the amount above nisab. At 2.5%, the zakat due is £312.50.
Example. If the same person also owes £2,000 on a credit card due immediately, schools that allow debt deduction would reduce the zakatable total to £10,500 first, giving zakat of £262.50. A school that does not deduct debts would keep the calculation at £12,500 and £312.50. The next section explains why the answer changes by school.
Money owed to you: the harder question
Money that other people owe you, whether a personal loan to a relative or an unpaid invoice in a small business, counts as part of your wealth in principle. The four schools differ on exactly when and how it becomes zakatable, mainly based on whether the debtor is likely to pay you back.
Debts that are expected to be repaid are generally zakat-applicable; debts unlikely to be recovered are not, and scholars commonly sort receivables into “strong” debts (the debtor acknowledges the debt and can pay) and “weak” or doubtful debts (the debtor is insolvent, disputes the debt, or has disappeared).
Example. Suppose a person lent a relative £4,000 two years ago, and the relative is financially stable and expected to repay in full. Under the view that treats this as zakatable every year it remains outstanding, zakat would be calculated on that £4,000 each year, alongside the person’s other cash and savings.
| School | Zakat on debts owed to you | When it becomes due |
|---|---|---|
| Hanafi | Receivables are classified into tiers based on their origin, with debt arising from the sale of trade goods treated as the strongest category | Zakat on a debt likely to be repaid is obligatory each year, but the creditor does not pay until it is received, then pays for all the previous years at once |
| Maliki | Strong debts are zakatable; the school sets out its own categories for how reliable a debt must be | Zakat is paid for one year upon receipt, even if the debt remained outstanding for several years |
| Shafi’i | The dominant later view holds that debt does not block zakat, because money owed enters the creditor’s zakatable assets each year as if already in hand, provided the debtor acknowledges it and can pay | Due annually alongside the creditor’s other wealth, on this dominant view |
| Hanbali | Deferred debts are treated like debts owed by an insolvent person, since the creditor cannot collect immediately | Zakat for all the outstanding years is paid once the debt is actually received |
A business that sells on credit faces the same question for its accounts receivable. Accounts receivable, meaning money owed to the business, are generally considered productive assets and typically zakatable once collection is reasonably expected. The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) addresses zakat on financial assets including receivables in its own standards, which Islamic banks and funds use for their own zakat calculations; this is a matter for the institution’s own shariah board rather than something this article can state for any named provider.
Debts you owe: what gets deducted first
The flip side is debt you owe to someone else, such as a credit card balance, a personal loan, or the coming month’s rent. Here too the schools part ways.
| School | Deducting debts you owe |
|---|---|
| Hanafi | Takes a comparatively thorough approach to debt deduction, generally allowing debts due soon to be subtracted before the nisab and rate are applied |
| Maliki | Allows debt deductions alongside the Hanbali and Hanafi schools |
| Shafi’i | Generally does not allow debt deductions, since zakat is assessed on wealth actually held regardless of what is owed elsewhere |
| Hanbali | Restricts deduction to cases where the debt would bring the remaining wealth below the nisab threshold, rather than allowing full deduction in every case |
The chart above uses round example figures only, to show how the same 2.5% rate scales with the size of the zakatable total; it is not a reflection of any real currency value of nisab, which depends on the current gold or silver price.
Putting it together
A practical order for the calculation most readers follow, whichever school they use, looks like this.
- List all cash, bank balances, and money held at home on the chosen zakat date.
- Add any gold, silver, trade stock, and receivables your school counts as zakatable.
- Subtract debts your school allows you to deduct.
- Compare the net total against your nisab, in weight terms converted to today’s gold or silver price.
- If the net total meets or exceeds nisab, and has done so for a full lunar year, pay 2.5% of the net total.
Because the schools disagree on points 2 and 3, two people with identical bank balances can arrive at different zakat figures depending on which school they follow and how they treat a specific debt. This is normal within Islamic scholarship and not a sign that either figure is wrong. Readers who want help tracking the calculation and the date each year can use the zakat calculator or the hijri converter to fix a lunar anniversary.
Because every household’s mix of savings, debts and receivables is different, and because the schools genuinely differ on some of the points above, readers should ask a qualified scholar familiar with their own school and their own figures before finalising what they owe.
Sources
- IslamWeb Fatwa Centre: Gold and Silver in calculating Nisab for Zakah
- Sunnah.com: hadith collection search, Sahih al-Bukhari, Book of Zakat
- Joe Bradford: Deducting Debt from Your Zakat Calculation
- SeekersGuidance: Which Debts Affect Zakat for Both Debtor and Creditor?
- GiveDirectly: Zakat Calculator, Schools of Thought and Zakat
- Islamic Finance Calculator: Hanbali Zakat Rules
This article explains what the four Sunni schools say and links its sources. It is education, not a fatwa and not financial advice. For your own situation, ask a qualified scholar.