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!
Yielders does not provide any advice in relation to investments and you must rely on your own due diligence before investing. Investments in property and unlisted shares carry risk and you may not receive the anticipated returns and your capital may be at risk.