Zakat on Child Trust Bonds

04 Jun 2019 Ref-No#: 1861

Assalamu Alaikum Wa Rahmatullah

I apologise in advance for the long question that I am about to ask.
It is related to Zakat and I will try to make it as short as possible.

I have been paying Zakat on off just to stay safe, even though I don’t work, I do have a little savings.
This year I have been looking more into Zakat and how to pay as I work from home and earn a little which I am saving for Hajj in shaa Allaah.
Then it dawned on me that I haven’t been paying my zakat properly as I have got child trust funds and I wasn’t sure whether I needed to pay Zakat on them too.

My Question

1) I have 5 children Alhamdulillah and started child bonds for them since 2006. Do I need to pay Zakat on these? As these are like investments/savings for their future. How do I work out how much I need to pay? so for example 1st year it was worth £400, 2nd year it was worth £700 3rd year it was worth £2000 etc …Do I work out how much each bond was worth every year and calculate zakat of 2.5%? or do I work out what it is worth only this year and carry on paying yearly from this year onwards? Or do I deduct from previous year?

please can you help me understand as I am so confused and would like to pay.

Answer

Wa’alaykum as Salam wa rahmatullahi wa barakatuhu,

The funds contributed to the trust belongs to your children. Hence, it does not add to your tax, it will form part of their estate etc. The government are also clear that the funds belong entirely to the child (https://www.gov.uk/child-trust-funds). Even if you contributed from your own savings to the trust, the trust will be the Wakil (representative ) of the child. So ownership is transferred when contributing.

The ruling of Zakah will be that until the child becomes Baligh (for girls between 9-13, for boys between 12-15), they do not have to discharge any Zakah. If they have wealth when they become Baligh, they will wait for a year to pass on that wealth, and Zakah becomes compulsory upon that wealth (the following year after becoming Baligh)

They will have to pay 2.5 % of the value of the funds each year. They will have to determine the exact value of the Trust each year, and pay according to that value.

References

وشرط وجوبها العقل والبلوغ والإسلام والحرية (ملتقى الأبحر – ص: 285)