Fatwa ID: 02996

Answered by: Maulana Muddasser Dhedhy

Question:

Assalamu Alaikum Wa Rahmatullah

I had a question regarding working out zakah for money borrowed out if I borrowed out £20000 and receive it in 5 years how do I work out the zakah? I have read two opinions and am confused.

One opinion is the following,

"In the first year zakat is payable on the full £20,000, in the second year it is payable on £20,000 less the 2.5% zakat (£19,500) and in the third year it is payable on £19,500 less the 2.5% zakat (£19,012.50)."

The second opinion,

One pays zakah for £20000 for each year for five years without deducting the 2.5% from each year?

Jazak Allah Khair

Answer:

بسم الله الرحمن الرحيم

In the name of Allah, the Most Gracious, the Most Merciful.

Zakat on money borrowed out becomes wajib on the creditor once the money has been paid back by the debtor. If the creditor wishes to pay the Zakat of the money they have borrowed out before the debtor has paid them back, that is also permissible and Zakat will not have to be paid again once the debtor has paid the creditor back.

As for the method of paying Zakat on a debt that has spanned several years, 2.5% is paid on the original amount (i.e. £20000) for the first year then for the second year 2.5% of £19500 (i.e. £20000 – £500) will be given in Zakat and likewise for the following years.^[1]

Only Allah Ta'ala knows best

Written by Maulana Muddasser Dhedhy

Checked and approved by Mufti Mohammed Tosir Miah

Darul Ifta Birmingham