Dear Hadi,
Salaam, I follow the Hanafi Madhab and I’m calculating years of missed zakat and am seeking clarity regarding disability benefits that were intended for me, but received and controlled by my father, as I did not have a bank account during childhood. I was born with a disability and received government disability benefits. From birth to age 16, I was awarded Disability Living Allowance (DLA). According to the UK government website, DLA is intended for the disabled child, but the parent must apply on the child’s behalf, so my father applied for it. Although intended for me, the payments were made into my father’s bank account, and he had full control. I never accessed or received this money directly. From a fiqh perspective, I’m unsure whether this money should be considered my wealth (since it was awarded due to my disability and intended for me) or my father’s wealth (since it was paid into his account and managed by him). Who was responsible for paying zakat on it? If zakat was obligatory upon me, I am unsure of the exact date I reached puberty (I know the year but not the month). Can I pick any date within that year (e.g. 20th of Ramadan), assume I reached puberty on that date, assume I would’ve also exceeded the nisab as I technically would’ve owned that backlog of DLA payments, and set that date as my zakat anniversary? This would be devastating because rough calculations would mean by the time I hit puberty at age 13, on paper I “owned” £70k. DLA payments were minimum £5k a year so age 14 I pay zakat on £75k, age 15 £80k. DLA payments stopped at 16 so by that logic, I should've been paying zakat on that £80k every year for the rest of my life. This is money I’ve never ever owned, received or controlled. For all I know, my dad could've spent it all. From age 16, DLA payments ended but I was awarded Personal Independence Payment (PIP). As stated on the government website, PIP is intended for the disabled person, and the disabled person must apply, so I personally completed the application, attended the assessment centre, and explained why I needed the money. Again, although intended for me, the payments were made into my father’s account until I opened my own bank account at age 18, after which I gained control of the funds. Assuming no zakat was due on DLA, was zakat on PIP obligatory from age 16 (when it was awarded and intended for me) or from age 18 (when I actually received and controlled the funds)? As with DLA, if I should’ve paid from age 16, that’s minimum £5k of funds I should be paying zakat on every year for the rest of my life despite never owning this sum, it all went to my Dad. JazakAllah Khair for your advice and guidance
Dear Reader,
Thank you for your question and for being so conscientious about wanting to ensure you pay any zakat due. While we do not give fatwas, we will offer you our best advice on your situation.
With regard to payments made into your father's account, over which you had no control, we do not think, and God knows best, that you owe zakat on those funds. They were not under your control or ownership and it seems you do not know if or how they were spent by your father.
We think that your obligation of zakat would begin with the funds you started receiving into your own account at age 18. Do keep in mind that zakat is not an "income tax" on any money received. Rather, the traditional view is that you pay 2.5% on your accumulated wealth (i.e. money you have held for a full year), as long as that wealth exceeds the minimum amount on which zakat is due (technically called the nisab, and defined as the equivalent of 85 grams of gold). Currently, 85 grams of gold is equivalent to approximately £9400. If the money you have held onto for a full year is less than this, then we do not believe you owe any zakat.
If, on the other hand, your accumulated wealth that you have held onto for the full year rises above £9400, then you can calculate the 2.5% and pay that in zakat.
Depending upon your personal circumstances and whether the PIP money you receive is what you are relying upon to live, you may also be interested to know about a fatwa issued some time back by Sheikh AbdAllah Mashad, a former grand mufti of Al-Azhar in Egypt.
He issued a fatwa that many Muslims now use to fulfill their obligation of zakat without depleting their retirement accounts to the point that they cannot meet their living expenses. Basically, the idea behind his fatwa is to treat your retirement account as if it were a fixed, unbreakable asset, such as a piece of agricultural land that yields crops annually.
This land is not sold off to pay 2.5% of its value, but rather, the zakat is calculated annually as 10% of the crop yield. According to this view, Sheikh Mashad reasoned that every year, one could pay 10% of the income generated by the retirement account rather than 2.5% on the entire account.
It is up to you, of course, whether you want to take this fatwa or not, whether you consider the PIP money to be truly all the money you have to live on, and so you can apply the fatwa to it, etc. Certainly, paying zakat should not be an obligation whose endpoint would be to impoverish the payer, and God knows best.
In peace.