Zakat on Stocks and Shares: How to Calculate (UK Guide 2026)

Stocks and shares are zakatable wealth. The method depends on whether you actively trade or hold long-term investments.

Quick Answer

Method 1: Active Trading (Buy & Sell Frequently)

If you buy and sell shares regularly for profit, your shares are treated as business stock (goods for trade). The entire market value is zakatable.

Zakat = Portfolio market value on Zakat date × 2.5%

Example

Method 2: Long-Term Investment (Buy & Hold)

If you hold shares as investments (for dividends or long-term growth), only the company's zakatable assets proportion is included. This is more complex:

1. Look up the company's balance sheet
2. Calculate: (Cash + Receivables + Inventory) / Total Assets = Zakatable %
3. Apply this % to your shares' market value
4. Pay 2.5% on the result

In practice, most scholars and Zakat organisations simplify this to approximately 25-40% of market value for diversified portfolios.

The Simple Approach

Many scholars accept: Zakat = Portfolio value × 30% × 2.5% (i.e., effectively 0.75% of total value) for long-term holdings.

Investment ISAs (Stocks & Shares ISAs)

Stocks & shares ISAs are treated the same as regular investments for Zakat purposes. The ISA wrapper provides tax benefits from HMRC but has no bearing on Islamic obligations.

Index Funds and ETFs

For index funds and ETFs, apply the same long-term holding methodology. Since these are diversified, the 25-30% liquid assets estimate is reasonable.

Dividends

Dividends received and sitting in your account are cash — add them to your savings total in the Zakat Calculator.

What About Non-Shariah-Compliant Stocks?

If you hold shares in companies that deal in haram activities (alcohol, gambling, interest-based finance), the Zakat calculation is the same — but you may also need to "purify" any dividends by giving away the haram portion as Sadaqah. Consult a scholar for specifics.

Calculate your full Zakat including investments →