Is Zakat on Interest Required? (Purification Rules)

A common point of confusion for Muslims with savings accounts or investments is how calculate Zakat on the "extra" money. If you have £10,000 of your own savings and £500 of accumulated interest, do you pay 2.5% on £10,500?

The answer lies in understanding the definition of wealth in Islam. Zakat is a purifier for Halal (lawful) wealth. But what happens when the wealth itself is impure?

Scholarly Consensus Overview

Zakat on InterestYou cannot purify filth partially.

Total Disposal100% of interest must be given away.

Zakat on PrincipalPay 2.5% only on the original Halal capital.

The Core Rule: Dirty vs Clean

The "Sewage" Analogy

Scholars often use the analogy of water. Zakat is like a filter that cleans 97.5% of your pure water by removing 2.5%. However, Interest (Riba) is like sewage. You cannot "filter" sewage to make it 97.5% drinkable. You must flush 100% of it away.

Principal vs Excess

If you have £10,000 principal (your money) and £500 interest:
1. You own only the £10,000.
2. You pay 2.5% Zakat on the £10,000 (£250).
3. You must give away the entire £500 Interest to charity to remove it.

Tool: Classify Your Income

Not all "investment returns" are Riba. Use this tool to check.

Dirty Money Classifier

Select a source to see if it needs Zakat (2.5%) or Disposal (100%).

Select a source above to analyse.

Tool: Zakat vs Disposal

Purification vs Zakat

They are opposites. Do not confuse them.

Zakat (Growth)

Source:Halal Wealth
Amount:2.5%
Intention:Worship & Reward

"Take from their wealth a charity by which you purify them..." (9:103)

Purification (Disposal)

Source:Haram Income
Amount:100%
Intention:Removing Filth

"Allah is Pure and accepts only that which is pure." (Muslim)

You cannot use Purification money to pay your Zakat debt.

The Red Line

Where do scholars draw the line?

Errors here can invalidate your Zakat.

1

Paying Zakat FROM Interest:
You cannot use the £500 interest to pay the £250 Zakat liability of your clean money. This is like washing clothes with dirty water. Your Zakat remains unpaid.
2

Expecting Reward:
When you give away the £500, do not expect the reward of Sadaqah. Your reward is only for the act of obedience (repentance), not the donation itself.

Where to send the money?

Since this money is "impure", many scholars advise against using it for sacred purposes (like building a Mosque or buying Qur'ans).

Charity Routing System

Where can you send "Dirty Money" vs "Clean Zakat"?

Mosques & Qur'ans

Build mosques, print Qur'ans.

Zakat: YESInterest: NO

General Disaster Relief (Food/Tent)

Feeding the hungry, providing emergency shelter.

Zakat: YESInterest: YES*

*Many scholars allow using interest money for public welfare/infrastructure or general relief, but NOT for building Mosques.

Public Infrastructure

Building toilets, bridges, hospitals.

Zakat: SOMETIMESInterest: YES (Best Use)

Summary & Practical Advice

Separate Your Funds: Keep a spreadsheet tracking exactly how much interest has entered your account. It does not belong to you.
Dispose 100%: Do not pay 2.5% on interest. Pay 100% of it to charity.
Zakat is separate: Pay your actual Zakat from your clean salary or savings.

Frequently Asked Questions

What if I mixed the interest and lost track?

You must make a "reasonable estimate" (Ghalibat al-Zann). Try to calculate the likely percentage. If you are unsure between a lower and higher figure, Pay the higher figure to be safe (precaution).

Can I deduct taxes from the interest amount before disposing?

This is a point of debate. Some contemporary scholars allow deducting the tax triggered *specifically* by that interest, so you only dispose of the "net" gain. Others say you should dispose of the gross amount to be spiritually safer.

Why can't I build a mosque with it?

A mosque is the House of Allah. It must be pure. Building it with Haram funds is considered disrespectful. It is better used for secular public goods (roads, bridges, toilets) or general aid.

Methodology & Sources

This guidance is derived from the standard Fatwas on the disposal of Haram wealth (Takhallus).

Sources & References:

Imam Al-Nawawi (Al-Majmu'): Discussion on disposing of wealth acquired through invalid contracts.
AAOIFI Standards: Modern standards for Islamic financial institutions regarding "Charity Charity" funds (disposal of impermissible income).