National Zakat Foundation: Religious-Restricted Grants, Support for Asylum Seekers and the Use of UK Tax Relief

Information and background

The National Zakat Foundation (NZF) is a registered UK Islamic charity that collects religious donations from Muslims and distributes financial assistance to eligible Muslims experiencing hardship.

The organisation also supports refugees and asylum seekers through its hardship-relief work. Muslim Aid has previously reported that more than 50% of applicants receiving direct financial hardship grants from NZF were recently arrived refugees or asylum seekers. NZF's application guidance accepts an Asylum Registration Card as identification, although people seeking asylum are expressly excluded from its Housing Fund.

This raises important questions about religious eligibility, charitable funding and the use of public tax relief.

1. Who can receive financial assistance?

NZF's core Zakat-funded hardship grants are restricted to Muslims who satisfy its religious and financial eligibility requirements.

Its published hardship grants range from £280 to £1,870, depending on family size and legal status. These are one-off, non-repayable payments intended to help with essential living expenses, including food, clothing and household costs.

Applicants can receive one successful hardship grant per year.

This creates an obvious distinction: a non-Muslim British citizen experiencing the same financial hardship cannot qualify for these particular grants simply on the basis of need.

2. Where does the money come from?

NZF receives several different types of income:

• Zakat: Muslims generally contribute 2.5% of their qualifying wealth when they meet the Nisab threshold.

• Sadaqah: Voluntary charitable donations, including donations designated for operational expenses.

• Gift Aid: Tax relief claimed on eligible donations from UK taxpayers.

• Corporate contributions: Business donations and matched-funding arrangements.

• Purified interest: Interest income donated for charitable purposes under the organisation's religious policy.

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NZF states that Zakat is not used for its core administrative or fundraising expenses. Instead, these costs are covered through other income streams.

3. The taxpayer contribution: Gift Aid

Gift Aid is particularly relevant to this discussion.

Under the UK scheme, charities can reclaim 25p for every £1 donated by an eligible taxpayer who has made a valid Gift Aid declaration.

This is tax relief administered through HMRC and represents tax revenue forgone by the public finances.

It is important to distinguish this from a direct government grant: the original donation is privately made, while Gift Aid provides additional tax relief.

NZF's 2024 audited accounts record total income of £10,173,392. However, they do not separately disclose Gift Aid as an isolated figure. Instead, Gift Aid is grouped with Sadaqah, Riba and other income.

The combined figure for these income categories was £2,012,006 in 2024. It would therefore be misleading to describe the entire amount as Gift Aid.

4. What do the audited figures show?

According to NZF's 2024 annual report:

Financial measure	2024
Total income	£10,173,392
Total expenditure	£8,887,428
Zakat distributed	£6,316,003
Charitable expenditure	£8,225,670
Fundraising expenditure	£661,758

NZF also reports that it has distributed more than £39 million in Zakat since 2017 and supported more than 135,000 beneficiaries across the UK on its current website. These are separate cumulative impact claims, not 2024 annual figures.

5. Is this fair to the wider British public?

This is the central issue.

NZF is entitled to operate as a religious charity and distribute Zakat according to Islamic principles. Muslims should be free to donate to charitable organisations that support their own religious communities.

However, the use of Gift Aid introduces a wider public financial consideration.

A non-Muslim taxpayer can contribute to the public finances that support the Gift Aid system, while being excluded from NZF's core Zakat-funded hardship grants because they do not meet its religious eligibility requirements.

This raises a legitimate question about whether charities benefiting from public tax relief should face greater transparency and scrutiny when their direct financial assistance is restricted by religion.

The issue is not whether religious charities should exist. It is whether the public should be expected to support tax incentives without being able to scrutinise how those benefits operate alongside restricted charitable access.

Conclusion

The National Zakat Foundation provides substantial financial assistance to eligible Muslims, including reported support for recently arrived refugees and asylum seekers.

Its religious restrictions mean that people experiencing comparable hardship can be treated differently depending on their faith.

At the same time, NZF benefits from Gift Aid, a tax relief scheme administered through the UK public finances.

This deserves a serious discussion about fairness, transparency and accountability.

British taxpayers should be able to understand how tax relief benefits religious charities, how those charities distribute their funds and whether the public interest is adequately protected.

Religious freedom and charitable independence are important, but so are transparency and public accountability. These principles should not be mutually exclusive.