The queen’s death made the son a king, and a rich man – but where does the money actually come from? | UK News

When the Queen died, fortunes passed along the line of succession along with titles.

Her death also made her eldest son an enormously wealthy man Kingwhile his heir secured a guaranteed income of more than £20 million a year along with the title of Prince of Wales.

The royal family is financed by a hefty collection of assets with roots in the Middle Ages, refined over time in deals with parliament, the latest in 2012.

Negotiated by George Osbourne, it guaranteed income streams for the monarch, their heir and the wider family, while leaving the issue of taxation largely voluntary.

The main source of the King’s funding is the Sovereign Grant, calculated as 25% of the profits of the Crown Estate, a £15 billion portfolio of commercial and residential property, agricultural and marine land owned by the Crown, not the individual monarch.

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In 2021-22 it was worth £86.3 million, of which £52 million covered official travel, the cost of employing nearly 500 members of the royal household and the maintenance of the occupied royal palaces; Buckingham Palace, Windsor Castle, Clarence House, St James’s Palace, Kensington Palace, Marlborough House Mews and Hampton Court Mews.

The remaining £34 million was allocated to an ongoing “re-service” of Buckingham Palace. The Sovereign Grant was increased from 15% of revenue to 25% in 2018 to cover the total cost of £369m over 10 years.

Practically for the monarch, the value of the Sovereign Grant cannot decrease even if revenues fall, although that may be unlikely given the ownership of large parts of the British seabed, on which hugely lucrative licenses for offshore wind turbines are to be granted in the coming years. .

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The Sovereign’s Grant, which King Charles will inherit, pays for staff and maintenance at palaces including Windsor

No inheritance tax

King Charles will also draw income from the Privy Purse, which consists mainly of the net income of the Duchy of Lancaster, a £600m portfolio of land and property assets worth £22.3m in 2020-21.

The Queen used this to cover the costs of other members of the royal family, including his siblings Prince Andrew, Princess Anne and Prince Edward, but not his heir.

The Queen also enjoyed private wealth estimated at more than £350 million, including ownership of Balmoral and Sandringham. If, as assumed, the bulk of her fortune goes to King Charles, he will uniquely not have to pay inheritance tax on his new wealth.

Gifts from monarch to monarch are exempt from death duty, although bequests to her other children, or other individuals or entities, will be taxable.

A swan is seen with Kensington Palace in the background, in London, Britain June 28, 2021. REUTERS/Henry Nicholls
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Kensington Palace

No probate for this will

We will never know the details, however, because the sovereign’s will remains sealed, the only will in the realm that does not need to pass into probate.

The Sovereign Grant is not taxed, but since 1993 Queen has voluntarily paid income tax on income from the Duchy of Lancaster not used for official purposes. King Charles has yet to confirm that he will do the same.

As heir to the throne, Prince Williamhis wife and children will now benefit from the Duchy of Cornwall, a £1bn portfolio of farmland, property and investments which includes the Oval Cricket Ground & Isles of Scilly.

Voluntary income tax

The estate paid the current king £23m in the last financial year, income which is exempt from corporation and capital gains tax, and only subject to voluntary income tax on the net profit after unspecified deductions.

The Duke and Duchess of Sussex leave the National Service of Thanksgiving at St Paul's Cathedral, London, on day two of the Platinum Jubilee celebrations for Queen Elizabeth II.  Photo date: Friday 3  June 2022.

Having decided to leave the working royal stable, the Duke and Duchess of Sussex is now relying on trading its talents and remaining titles, with income from various media deals including a £20m book deal.

In a deep irony, Harry and Meghan has signed a reported $100 million deal with Netflix, which owes much of its dominance in the streaming market to The Crown, a dramatization that has done for the Windsors what Shakespeare did for the Plantagenets and costs more to produce per series than the annual sovereign the grant.

None of these revenue streams cover the cost of royal security, widely estimated at more than £100 million a year and borne by taxpayers, or the price of royal visits often funded by local authorities.

Nor does the royal family pay for their own celebrations. The Treasury set aside a further £28 million to fund the recent platinum jubilee, the majority of which was spent on four days of pageantry in central London.

Even with a conservative annual bill of £250 million, the monarchy’s advocates claim they more than pay.

Is tourism picking up the bill?

Tourism is routinely cited as their biggest asset, but revenue from the five royal palaces open to the public was just £9.4m last year, up from just £20m before COVID, and none are in the top 20 most visited popular attractions in the UK. With 1.5 million visitors, Windsor Castle ranked only 23rd, behind Chester Zoo, Stonehenge and Tate Modern.

Contrast that with the appeal of Versailles, the palace of the old French monarchy, which attracts nearly 10 million visitors a year, and it suggests Britain’s palaces are underperforming.

Less quantifiable, but almost certainly more valuable, is the brand value the Windsors bring to Britain. They give Britain’s diplomats soft power and its businesses a unique selling point.

Chateau de Versailles (Palace of Versailles) is seen on the reopening day in Versailles, near Paris, following the outbreak of the coronavirus disease (COVID-19) in France, June 6, 2020. REUTERS/Charles Platiau
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Paris’ Chateau de Versailles beats Britain’s palaces in the tourism numbers game

“Don’t mess with the monarchy”

One FTSE 100 executive, who recently returned from an investor tour of the US, said: “Don’t mess with the monarchy. After Brexit, and with all the dysfunctional politics, it’s about the only thing the rest of the world thinks still works in Britain.”

This brilliance may even be enhanced by the Queen’s passing and the sustained display of pageantry and proclamation the past week has brought.

Weddings, divorces, defection and shame

She has been mourned worldwide, with messages of goodwill from Beijing to Paris, and her funeral will take its place in the dramatic arc of weddings, divorces, apostasy and disgrace that has captured global attention throughout her reign.

King Charles, rising at the height of a cost-of-living crisis and without the depth of goodwill enjoyed by his mother, will face greater scrutiny of his household and spending, not least how he will use at least eight palaces and private homes now available to him, and how many of the family will benefit.

Every CEO will tell you that stability is the greatest asset to any business, and the Queen’s passing can only bring uncertainty, but the firm’s income under Charles III is at least guaranteed.

And as the Elizabethan era ends with the first full state funeral of the color TV age, the world will still be watching.

Whether the King can maintain the value of the Windsor stock, and public consent to the financial settlement, will be more a matter of politics and philosophy than economics.

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