Is zakat compulsory on child benefit payments and who is the owner of child benefit payments?
The answer
In principle, zakat is compulsory on one who possesses cash, gold, silver, business stock etc. equivalent to 612.36 grams of silver after deducting any debt to be paid within a year. 2.5% of one’s net assets must be dispensed as zakat after the passing of one lunar year.[1]
In short: child benefit belongs to the parent and counts in their zakatable assets.
Explanation
Child benefit (or family allowance, children’s allowance) is a social security payment disbursed to the parents or guardians of children. Child benefit payments are transferred into the ownership of the parent/guardian of the child and not the child. The parent is given possession of the child benefit to spend in the best interests of the child.[2]
Thus, when the parent calculates one’s assets to see if they qualify for zakat, child benefit payments will also be included in one’s assets.
And Allah knows best.
Mufti Faraz Adam
References
1وَلَا تَجِبُ إِلَّا عَلَى الْحُرِّ الْمُسْلِمِ الْعَاقِلِ (ف) الْبَالِغِ (ف) إِذَا مَلَكَ نِصَابًا خَالِيًا عَنِ الدَّيْنِ فَاضِلًا عَنْ حَوَائِجِهِ الْأَصْلِيَّةِ مِلْكًا تَامًّا فِي طَرَفَيِ الْحَوْلِ (الاختيار ج 1 ص 99 دار الكتب)
[2] https://www.gov.uk/browse/benefits/child
http://www.hmrc.gov.uk/childbenefit/start/who-qualifies/what-is-childbenefit.htm
Based on the Hanafi school and on the question as it was asked. Another mufti may reach a different conclusion. Read the disclaimer.