Zakat and Yielders Investments

person putting money inside brown wooden storage
Photo by Micheile Henderson on Unsplash

A number of users have been in touch to ask about their Zakat commitments on their investments with us now that Ramadan is underway. As always, we are keen to help provide guidance on fulfilling the obligations on your investments with us. This year, we also wanted to talk about the Series A shares on Seedrs, as this is not something we have covered with our investors before. We have broken out specific guidance for each type of share associated with Yielders below.

Shares in Retail Assets (2-5 Year Investment Term, Monthly Dividends + Capital Appreciation Share)

  • [Assuming a 3 year term] For retail investments, you would pay Zakat on the income for the years that the property isn’t sold, so for the 2 years of income you receive from rental income you would add this to your overall cash balance that you calculate for Zakat.   
  •  In the final year, the year that the property is subject to be sold, you calculate the value of your share and pay Zakat on the entire amount e.g. If your share was £1k in value, the first 2 years you would pay Zakat on the 5-6% rental income you are receiving, and the final year 3rd year, you would pay Zakat on the £1k+profit as it becomes a saleable good (stock) as well as any income from rent.  

Shares in Top Yielder Assets (12-18 Month Investment Term, Capital Appreciation Share) 

  • You would expect to pay Zakat on the total amount you have invested and the profit you intend to receive from this, as you are developing the asset for sale.  
  • However, whilst still in development phase, as you are not aware of the total return at this point, you can pay Zakat on the cost element (total investment amount).  
  • However, if you sell for a profit (within the same year) but have not realised the profit, you can pay Zakat on the invested amount, and then if sold and profit is realised, you must pay Zakat on the profit as well.  

Shares in Yielders via Seedrs (Series A Funding Round Held in 2019) 

For these shares, assuming that you intend to hold them and are not trading them: 

  • Take the share price of £7.89 x your total number of shares 
  • Calculate your Zakat on 2.5% of this figure  

We’d like to stress that the above is offered as guidance only and we advise you speak to scholars you trust for personal Zakat obligations. Finally, the team would like to wish Ramadan Kareem to all! 

2 thoughts on “Zakat and Yielders Investments

  1. Asalaamu ‘alaykum firstly, followed by a big jazakallah khair. In fact, This very morning I was trying to work out the zakat implications on my investment with Yielders and then your weekly newsletter email popped up leading me to this article. Having read your guide lance, it was in fact in mine with my own thinking but it’s always wise to check it over with a scholar in the field. Saying that, you’ve also hooked up with NZF with a webinar next Tuesday which I’ve already registered to so seems as though you’ve covered that question mark too!

    Anyway, I’m impressed with the efforts of the team at Yielders regardless of how my investment ends up! Please keep up the hard work with keeping us updated with all relevant info regarding our investments, current climate, new opportunities/ it’s all been quite helpful and transparent.

    Stay safe and well

    Liked by 1 person

    1. Walaikum Salam Mohammed, thank you for your kind support; we are really pleased to hear that you find our work valuable. We will always insha Allah strive to be as transparent as possible for all our investors. Stay safe and Ramadan Kareem.

      Like

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