Zakat on Gold, Silver and Jewellery
By the end of this module, you will be able to:
- 1Explain how Zakat applies to gold and silver, including jewellery
- 2Describe the difference in scholarly opinion on personal-use jewellery
- 3Value gold and silver correctly for Zakat purposes
Gold and silver as Zakatable wealth
Gold and silver are treated as Zakatable wealth in their own right, separate from cash. This includes gold and silver bars, coins, and jewellery. The rate remains 2.5% of the current market value.
Personal-use jewellery: a point of difference
This is one of the most debated areas in Zakat calculation, so it is important to understand both sides.
Zakat is due on all gold and silver jewellery, even if it is worn regularly, because gold and silver are always considered growth-generating wealth.
Shafi'i, Maliki and Hanbali schools hold that Zakat is not due on jewellery that is genuinely for personal adornment and regular wear, but it is due if the jewellery is kept as an investment or worn only occasionally for that purpose.
Because of this difference, learners should establish which school of thought they, or the people they are advising, follow, and apply that view consistently rather than switching between views to reduce the amount owed.
How to value gold and silver
Gold and silver must be valued at their current market price on the Zakat calculation date, not at the price originally paid. Jewellers, gold Zakat calculators, and daily commodity price pages can all be used to check the current gram price.
Farah owns 40 grams of gold jewellery. On her Zakat date, gold is priced at £48 per gram. The value is 40 x £48 = £1,920. Following the Hanafi view that all gold jewellery is Zakatable, her Zakat due is £1,920 x 2.5% = £48.
Mixed metal and gemstone jewellery
For jewellery that combines gold or silver with other materials, such as gemstones, only the value of the gold or silver content is typically Zakatable, unless the whole piece is held purely as an investment, in which case its full resale value may be used instead.
A frequent error is valuing jewellery at its original purchase price, including the cost of design and craftsmanship, rather than its current resale value as raw metal. Zakat is based on the metal's present market value, not the retail price paid.