Zakat on Savings: Do You Pay Zakat on Bank Savings? (UK Guide)
Do you pay Zakat on savings accounts, current accounts, and cash ISAs? Clear guide for UK Muslims with calculation examples.
Yes, you pay Zakat on savings. All money held in bank accounts — current accounts, savings accounts, cash ISAs, and fixed deposits — is zakatable if your total wealth exceeds the Nisab threshold.
The Short Answer
All cash savings are 100% zakatable. Add up every bank account, savings pot, and cash ISA you own. If your total net zakatable wealth exceeds the Nisab (£5,590 gold standard or £350 silver standard), pay 2.5% Zakat on the total.
What Counts as "Savings"?
- Current accounts — your everyday spending account
- Savings accounts — including fixed-term and notice accounts
- Cash ISAs — tax-free savings are still zakatable
- Fixed deposits / term deposits
- Cash held in investment platforms (uninvested cash)
- Foreign currency accounts — converted to GBP at current rate
- Cash in hand — physical cash at home
- PayPal / digital wallets — any balance held
What About Interest?
Interest (riba) earned on savings is haram in Islam. However, you still pay Zakat on the total balance including interest. Many scholars advise:
- Pay Zakat on the full balance (including interest)
- Separately, give away the interest portion as Sadaqah (without expecting reward — it's removing haram wealth)
- Move to an Islamic bank account to avoid the issue
Calculation Example
Ahmed's savings:
- Current account: £2,500
- Savings account: £8,000
- Cash ISA: £5,000
- PayPal balance: £200
Total: £15,700 (exceeds Nisab)
Zakat: £15,700 × 2.5% = £392.50
Note: Ahmed would also include gold, investments, and other assets, then subtract debts. Use the Zakat Calculator for a complete calculation.
Frequently Asked Questions
Do I pay Zakat on savings I need for bills?
You can deduct bills and expenses due within the current month from your zakatable assets. Money set aside for next month's rent, utilities, etc. is deductible. Long-term savings "for a rainy day" are not deductible.
What if my savings fluctuate?
Calculate Zakat on the balance at your Zakat anniversary date. You don't need to track daily balances.
Are children's savings accounts zakatable?
The Hanafi school says no — Zakat is only on the wealth of adults. Other schools differ. If in doubt, consult your local scholar.
Calculate your total Zakat including savings →
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