Zakat on Pension, Shares and Crypto: 2026 Guide

Modern UK Muslims hold wealth in places the classical fiqh books didn't anticipate. A workplace pension drip-fed monthly via auto-enrolment. A SIPP holding ten different funds. A Stocks & Shares ISA tracking a global index. A few thousand pounds of Ethereum bought in 2022. None of this existed in 8th-century Madinah. The good news: the underlying principles haven't changed, and contemporary fatwa councils have done the work of mapping them onto modern assets.

This guide covers the four asset classes that most often confuse UK donors: pensions, individual shares and ETFs, Stocks & Shares ISAs, and crypto including NFTs.

At AmalQ we see all four come up.

Workplace pensions and SIPPs

The pension question is the most frequent one we get from UK donors. The answer hinges on a single distinction: can you, in principle, access the money?

Defined-contribution (DC) pensions and SIPPs: zakatable

These are pensions where the money is held in your name in a pot you can see, value, and (after age 55, soon 57) draw from. Auto-enrolled workplace pensions managed by Nest, Smart Pension, Aviva, Legal & General are all DC. Self-Invested Personal Pensions through AJ Bell, Hargreaves Lansdown, Vanguard, InvestEngine are also DC.

Most UK fatwa councils, including the National Zakat Foundation, Islamic Finance Guru and Wifaqul Ulama, say these are zakatable each year, even though you can't currently withdraw without an early-access penalty. The reasoning: you own the assets, you know the value, and the pot grows with your contributions. Whether the access is restricted by tax rules doesn't change ownership.

Defined-benefit (DB) pensions: not zakatable yet

These are 'final salary' or 'career average' schemes where you accrue a future income promise rather than a pot of assets. NHS pension, Teachers' Pension Scheme, Civil Service pension, USS for university staff. You don't own assets; you own a contractual promise.

Most contemporary UK scholars treat DB pensions as not zakatable until the income starts being paid. Once payments begin, the income counts as cash on receipt and is zakatable as part of your normal annual calculation.

Calculating Zakat on a DC pension

There are two methods used by UK fatwa councils. Both are valid; pick one and stick with it.

Method 1: Look-through (Islamic Finance Guru approach)

Look at what your pension is invested in. Pay Zakat on the proportion that's zakatable: typically the cash, equities held for dividends, and any debt-instrument exposure (which itself isn't zakatable as the asset, but the cash equivalents are).

• Default workplace lifestyle fund (mostly equities, some bonds): ~25% of fund value × 2.5%
• All-equity global tracker SIPP: ~25% of fund value × 2.5%
• Sharia-compliant fund (HSBC Islamic, Wahed): typically 25-40%, check the fund factsheet
• Money market / cash-heavy lifestyle fund (within 5 years of retirement): closer to 70-100% of fund value × 2.5%

Method 2: Net liquidation (NZF approach)

Calculate what you'd receive if you withdrew the pension today, after the early-access tax penalty (currently 55% for under-55s, plus loss of the 25% tax-free allowance). Pay 2.5% Zakat on that net figure. This produces a smaller liability and is favoured by donors who feel the look-through method overstates accessible wealth.

Individual shares and ETFs

Individual stocks and ETFs are zakatable. The amount depends on whether you're trading them or holding for the long term.

Held for short-term trading: full value

If you actively trade the position with the intent to sell within months for a capital gain, it's treated as trading stock. Pay Zakat on the full market value on your anniversary, exactly like business inventory.

Held long-term for dividends and growth: ~25% of value

If you're holding shares as a long-term investor (the typical retail investor with a Vanguard tracker, an L&G global ETF, or individual blue chips), you're treated as a part-owner of the underlying companies. Pay Zakat only on the proportion of the company's assets that are themselves zakatable: cash, receivables, inventory. The proportion varies by company but for broadly diversified equity portfolios it usually averages near 25%.

Some Sharia-compliant funds publish their exact 'Zakat factor' annually so you can use the precise number. Wahed publishes Zakat factors for each portfolio. HSBC Islamic Global Equity publishes one for the fund. For non-Islamic ETFs you'd typically have to estimate, and 25% is the widely-accepted proxy.

Sharia-compliant ETFs: same calculation, easier numbers

Sharia-compliant ETFs (Wahed FTSE USA Sharia, HSBC MSCI Islamic) screen out non-compliant sectors. The Zakat calculation is identical to a non-Islamic ETF: you still apply the ~25% Zakat factor to the long-term holding's value. The Sharia compliance just affects what you can hold, not the Zakat method.

Stocks & Shares ISAs

A Stocks & Shares ISA is just an ETF or share portfolio inside a tax-efficient wrapper. The wrapper has zero Islamic significance. Calculate exactly as you would for any equity holding.

For a typical £15,000 Vanguard FTSE Global All Cap ISA held long-term, the calculation is £15,000 × 25% × 2.5% = £93.75. The 25% factor accounts for the cash and receivables sitting on the balance sheets of the underlying companies, scaled across thousands of holdings.

Crypto: Bitcoin, Ethereum and altcoins

Most contemporary fatwa councils, including the Fatwa Centre of America, the Islamic Council of Europe, and Mufti Faraz Adam at Amanah Advisors, have ruled that cryptocurrency held as an investment is zakatable as a tradable asset. The minority view holds that crypto isn't a recognised currency or commodity and therefore isn't zakatable, but this is now a fringe position in 2026 because the practical reality has overtaken it: crypto is bought, sold, held, traded and inherited as wealth across every Muslim community in the world, and treating wealth as wealth is the foundational principle of Zakat regardless of which medium that wealth happens to take.

The calculation itself is simple.

How to calculate

Take the GBP market value of your crypto on your Zakat anniversary date. Not the price you bought at. Not the highest value during the year. The price on your specific anniversary date. Multiply by 2.5%. Done.

• Bitcoin held in cold storage: full GBP value × 2.5%
• Ethereum staked through a non-interest staking contract: full GBP value of principal + earned rewards × 2.5%
• Stablecoins (USDC, USDT): treated as cash; full GBP equivalent × 2.5%
• Altcoins on a DEX: same rule, GBP value on your Zakat date × 2.5%
• Crypto held by an exchange (Coinbase, Binance): same rule, the custody arrangement doesn't change ownership

A note on staking and yield

Staking rewards from proof-of-stake networks like Ethereum are treated by most contemporary scholars as legitimate earnings rather than riba, on the basis that you're providing a real service (network validation) and accepting genuine slashing risk. Yield from interest-style DeFi lending protocols is a different question; most scholars treat it as riba and recommend giving the yield to charity without intending Zakat.

NFTs and digital collectibles

NFTs are the most contested modern asset class. The two main positions:

Position 1: Not zakatable as personal collectibles

If you bought an NFT as a personal collectible (a profile picture, a digital art piece you display, a membership pass to a community), most contemporary scholars treat it like a painting on your wall: a personal-use item, not an investment asset. Not zakatable.

Position 2: Zakatable when held for resale

If you bought NFTs explicitly to flip (joined a mint hoping to sell at 5x, hold a portfolio of blue-chip projects waiting for a market recovery) they count as trading stock. Pay Zakat on the floor-price market value on your anniversary date.

The intent at purchase is what determines the category, similar to the property-flipping rule. There's a third minority view that says NFTs lack intrinsic value and therefore aren't zakatable at all, but this is increasingly out of step with contemporary fatwa.

A worked example for a young UK professional

Hassan is 28, a software engineer in London. His Zakat anniversary is 1st of Muharram. On that date in 2026, his modern assets are:

• Aviva workplace pension (Nest default lifestyle fund): £18,400
• Vanguard SIPP (FTSE Global All Cap, 100% equities): £9,200
• Stocks & Shares ISA at AJ Bell (mix of S&P 500 and individual UK shares): £24,800
• Bitcoin held in cold storage: £6,300
• 500 USDC stablecoin: £400 GBP equivalent
• 3 Ethereum NFTs bought as profile pictures: not held for resale

He follows the look-through method for pensions and uses 25% as the Zakat factor for diversified equity holdings.

Hassan also has £4,200 in his current account and £8,000 in a Cash ISA, which add another £305 of Zakat (£12,200 × 2.5%). His total Zakat for 2026 is £800.

What we've learned working with UK donors

Two patterns hold up across the donors who use the AmalQ calculator. Pension Zakat is the single most-skipped category. Roughly half of new users tell us they've never paid Zakat on their pension because they didn't realise it was due. Once they back-calculate, the missed Zakat for previous years is often substantial. We help them set up a payment plan rather than panicking about the lump sum.

Crypto holders are surprisingly diligent. Crypto-native UK Muslims tend to track their holdings to the penny and often over-pay slightly to be safe. The looser hands are usually the long-time stock-and-pension investors who never questioned whether their portfolio was zakatable.

Where AmalQ helps

The AmalQ Zakat calculator includes a modern-assets section that handles pension look-through, the 25% equity factor, and crypto market values pulled from real-time price feeds. You enter your fund balances and the calculator returns a per-asset breakdown plus the total. From there you can give directly to verified Zakat-eligible campaigns with full delivery tracking.

The fiqh is settled. The arithmetic is structured. The only thing left is doing it.

And establish prayer and give Zakat, and whatever good you put forward for yourselves, you will find it with Allah.

Frequently asked questions

Do I pay Zakat on my workplace pension?

Yes if it's a defined-contribution scheme (auto-enrolled Nest, Aviva, L&G, Smart Pension), no if it's a defined-benefit scheme (NHS pension, Teachers' Pension Scheme, Civil Service pension). For DC pensions, most UK fatwa councils calculate Zakat on 25% of the fund value to reflect the underlying asset mix. The Islamic Finance Guru and National Zakat Foundation both publish detailed methodology guides.

How do I calculate Zakat on a SIPP?

Treat a SIPP like any DC pension. The most common method is to apply a 25% Zakat factor to the total fund value if it's invested in a global equity tracker, then take 2.5% of that figure. If your SIPP holds a Sharia-compliant fund (Wahed, HSBC Islamic), use the fund's published Zakat factor for the year. These are usually 25-40% depending on portfolio risk.

Is Bitcoin zakatable?

Most contemporary fatwa councils, including the Fatwa Centre of America and Mufti Faraz Adam at Amanah Advisors, say yes. Take the GBP market value of your Bitcoin on your Zakat anniversary date and apply 2.5%. Use the price on that specific date, not your buy price or the year's high.

Do I pay Zakat on Stocks & Shares ISA holdings?

Yes. The ISA is a UK tax wrapper with no Islamic significance. Calculate exactly as you would for an equivalent non-ISA holding: usually 25% of the fund value × 2.5% for diversified equity portfolios. Sharia-compliant funds within the ISA publish exact Zakat factors annually.

Are NFTs zakatable?

Most contemporary scholars say it depends on intent. NFTs bought as personal collectibles (profile pictures, art you display, community memberships) are treated like a painting on your wall: exempt from Zakat. NFTs bought explicitly to flip count as trading stock and are zakatable at floor-price market value on your anniversary date.

What about crypto staking rewards?

Most contemporary scholars treat proof-of-stake rewards (Ethereum staking, Cardano staking) as legitimate earnings because you're providing a real network service and accepting slashing risk. Add the value of your principal and earned rewards together for Zakat. Yield from interest-style DeFi lending is a different matter; most scholars treat it as riba and recommend giving the yield away without intending Zakat.

Can I deduct pension contributions from my Zakatable wealth?

No. Pension contributions you've already made are part of the pension fund value, so Zakat is calculated on the fund value at your anniversary, with the 25% factor applied. You don't deduct ongoing contributions from cash either; they've already left your account by the time you calculate.

I missed paying Zakat on my pension for years. What do I do?

Back-calculate as accurately as you can. Take the fund value at each missed anniversary, apply the Zakat factor (usually 25%), and the 2.5% rate. Total it up and pay it as soon as possible. Most UK scholars treat unpaid Zakat as a debt that doesn't expire. If the lump sum is large, a payment plan over 12-24 months is acceptable as long as you pay it.

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