Zakat Questions and Answers
Examples: Rizwan lent £1000 to a friend of his who promised to pay it back after 3 years. His friend was true to his promise and returned him the money at the end of the three year period. Rizwan paid £25 in zakat in the first year, £24.38 in zakat in the second year and £23.77 in zakat in the third year.
Khan lent his nephew £1000 to help him start a Pizza restaurant. Unfortunately, business never picked up and his nephew went bankrupt. Khan does not expect to receive the money back, so no zakat is payable.
I lent money to someone, do I pay zakat on it?
Yes. You can either pay zakat for every year that passes until you receive the loan back, alternatively you can wait until you receive the loan and then pay the accumulated zakat in one go.
If the loan is insecure and you are not sure whether the borrower will be able to pay you back, it is better to delay the zakat payment until you receive it, at which point the zakat accumulated over the years will be payable. If you never receive the money back, no zakat is payable.