Zakat on Business Assets UK 2026
Zakat on a business is paid on its zakatable assets — trade inventory, business cash, and money owed to you — not on profit, turnover, or the value of premises and equipment.
Equipment, premises, vehicles, and goodwill are NOT zakatable.
What is zakatable in a business?
- Trade goods and inventory (at cost or market value)
- Business cash and bank balances
- Receivables (money owed to you, expected to be paid)
- Raw materials intended for production and sale
- Business premises (office, shop, warehouse)
- Machinery, equipment, and tools
- Vehicles used in the business
- Goodwill and intangible assets
- Long-term investments in fixed assets
Zakat on trade stock (inventory)
Trade stock — goods held for sale — is zakatable at its current cost or market value, whichever is lower. This follows the Hanafi school's principle of using the purchase price for most goods, though using current market value is also accepted and commonly used in practice.
If you run a retail, wholesale, or manufacturing business, conduct a stock count on your Hawl date and value the inventory held that day.
Zakat on business receivables
Money owed to your business (outstanding invoices, trade credit) is zakatable if you reasonably expect to collect it. Bad debts you do not expect to recover are excluded. Include the total of expected-collectable receivables in your zakatable assets.
Worked example — Hassan's wholesale business
Hassan runs a wholesale clothing business (sole trader). On his Hawl date:
- Trade inventory (cost value): £18,000
- Business current account: £4,500
- Outstanding invoices (expected to be paid): £6,000
- Business premises (rented, not owned): £0 zakatable
- Van: £0 zakatable
- Short-term business debts (supplier invoices due): −£3,000
Total business zakatable assets: £18,000 + £4,500 + £6,000 − £3,000 = £25,500
Hassan also has £2,000 personal savings. Total: £27,500
Nisab check: £27,500 > £496 ✓
Zakat due: £27,500 × 2.5% = £687.50
Limited companies
If you own shares in a limited company, technically the company's assets belong to the company, not you personally. There are two approaches:
- Preferred (more precise): Calculate the zakatable assets of the company proportional to your ownership share, and include that in your personal Zakat.
- Simplified: If the company is essentially a trading vehicle for your personal income, treat it as a sole trader and include all business cash, stock, and receivables.
Consult a scholar if your company structure is complex (multiple shareholders, significant retained earnings, investment holdings).
Frequently asked questions
How is Zakat calculated on a business?
Zakat on a business is calculated on the zakatable assets of the business — trade goods and inventory (at cost or market value, whichever is lower), cash and bank balances, and money owed to the business (receivables expected to be collected). Business premises, equipment, vehicles, and intellectual property are not zakatable.
Do I pay Zakat on business profit or turnover?
Neither. Zakat is not an income or profits tax. It is calculated on the zakatable assets the business holds on the owner's Hawl date — primarily trade stock, cash, and receivables. If the business has retained £20,000 in cash and £30,000 in inventory, Zakat is 2.5% of those holdings, regardless of annual profit or turnover.
What if I am a sole trader?
As a sole trader, your business assets are your personal assets for Zakat purposes. Include your business cash, trade stock, and receivables in your personal Zakat calculation alongside your other zakatable wealth.
What if I am a partner in a business?
Calculate your proportional share of the business's zakatable assets (cash, stock, receivables) based on your ownership percentage. Add this to your personal zakatable wealth and calculate Zakat on the total.
Is business property (office, warehouse) zakatable?
No. Business premises held for use in the business are not zakatable. However, if property is held as an investment (intended for sale or rental income), Zakat may apply differently — see our property Zakat guide.