Question Summary:
Zakat over how many years

Question Detail:

AWW, We sold a piece of land in Shabaan 2014. The buyer paid an initial amount of £3000 at the time of the agreement and agreed to pay the rest in due course. I have now received the second amount £4000. I normally calculate my zakaat on the 1st Ramadan. How do I calculated the zakaat on these amounts? Do I pay zakaat on the sum total (£7000) and over how many years ? Wassalam

Answer :

We understand from the above that the total debt is £7000
As for the £3000 (which you received in Shaban of 2014), then this would join the rest of your cash assets. Every Ramadan, you would calculate zakat based on the amount you have available on your zakat date.
As for the £4000 which you have now received, this will now also join these cash assets and have zakat calculated in the same manner. So if you have say £10000 in cash in Ramadan 2017, you would give 2.5% of this in zakat.
Alternatively, if you spent a portion of this money and only have £5000 cash on hand in Ramadan 2017, then 2.5% of this would be given in zakat.
In short, these amounts would now be added to the rest of your wealth and zakat calculated accordingly.
This is for the future.
You will also have to pay Zakat on this £4000 for the previous years (2014, 2015 and 2016). However, if you have already given Zakat for this £4000 for the previous years, then you do not need to pay for those years again.[i]
The method of calculating Zakat from the debt received is that one starts by deducting the zakat owed for the first year. This is deducted as 2.5% from the money received. Then one calculates the second year’s amount as 2.5% of the remainder. Then the third year’s amount is 2.5% of this remainder and so on.
So, for example, the debt received in 2016 is £4000, so when calculating the Zakat for the year 2014, you will deduct 2.5% from £4000 which is £100.This is the zakat owing for 2014.
 After deducting this £100 from the £4000, it leaves £3900, which would be used when calculating Zakat for 2015. So the Zakat for 2015 is 2.5% of £3900. You should do this repeatedly for each year. [ii]
And Allah Ta’āla Knows Best
Ridhwan Ur Rahman
Student Darul Iftaa
Cardiff, Wales, UK 
Checked and Approved by,
Mufti Husain Kadodia.