Q: How and when does a UK based SIPP ( Self invested personal pension ) begin to attract Zakat?
الجواب حامدا ومصليا ومسلما ومنه الصدق والصواب
A: A Self Invested Personal Pension (SIPP) is simply a tax efficient investment wrapper. The rules relating to zakat on investments will also apply to a SIPP. There are two critical points that will determine zakat liability. The first is the intention behind the investment and the second is the nature of the underlying investment. If, at the time of investment, the investment in the underlying asset is made with the intention of resale when a profit can be earned, then, for the purposes of zakat, the underlying asset is effectively sale stock and the full value of the asset is liable to zakat. It does not matter what the underlying asset is [provided it is lawful and can qualify as a commodity in shari’a]. If the intention is to hold as an investment, then zakat liability depends on the nature of the investment. If the underlying asset is an intrinsic zakatable commodity, such as gold, then the full value is zakatable. If the underlying asset is a not an intrinsic zakatable commodity, such as real estate, then it is not zakatable. If the underlying asset is a mixture of both types, then the zakatable commodity will be zakatable whilst the non-zaktable commodity will not.