The King’s Finances

The King’s Finances


These are separate from finances relating to maintenance of the monarchy.

On the death of his mother Queen Elizabeth II, the King inherited two private family residences and their attached estates: Sandringham House (20,000 acres) and Balmoral Castle (49,000 acres). The King has a private income from investments and from the above-named estates but what this income is and how the assets are managed is his business. The late Queen volunteered to pay income tax on her private income and the King is now taxed at prevailing rates.

Much media speculation as to the King’s personal financial worth is spurious. He does not own Windsor Castle or Buckingham Palace or the crown jewels or the Royal Collection and has no control over the capital of the Duchy of Lancaster. These are all his by right of being Sovereign and although he is responsible for the maintenance of the buildings, he holds them and everything else in this category of assets, in trust for his successors and nation. He may well have more private money than you or I but far less than someone else. We do not know and it is not our business to know but media chatter about vast untold riches and of him being amongst the world’s most wealthiest is nonsense.

The two Royal Duchies

There are two ancient Royal Duchies which belong to the monarchy and have done so for hundreds of years. This is no different from hundreds of families who still retain their ancient houses and lands. Both the Duchies have large revenue-producing Estates attached to them and the monies from these Estates contribute to the running costs of the monarchy. Both Royal Duchies are ‘held in trust’ for successors and so the capital assets cannot be sold or altered but they generate revenues which support the monarch, the Prince of Wales and some members of the royal family.

Duchy of Lancaster

This ancient Royal Duchy (founded 1265 and belonging to the Sovereign since 1399) is administered on behalf of the Sovereign by the Chancellor and the Duchy Council and is overseen by a government minister. The King is Duke of Lancaster by right of being Sovereign and the Estate is held in trust by him for his successor, the next Sovereign.

Additional to his own private income some of the income from the Duchy of Lancaster can be used to meet private expenses. The income from the Estate (known as the Privy Purse) is used in part for official expenses but also for private expenditure. Much of it goes toward the maintenance of members of the immediate family (see next paragraph). The Estate is separately run to the Crown Estate and all revenue profits are taxed.

Much of the King’s private or Duchy of Lancaster income goes toward supporting members of the immediate royal family who are engaged in royal duties and responsibilities i.e. his family engaged in royal duties - The Duke and Duchess of Edinburgh, The Princess Royal, The Duke and Duchess of Gloucester, The Duke and Duchess of Kent and Princess Alexandra. Although the amounts paid to these members of the family vary from year to year the total annual cost is c. £1.25 million. The Prince of Wales is financed from the other royal duchy, the Duchy of Cornwall estate. (See below.) 

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Duchy of Cornwall

The Duchy of Cornwall and the title ‘Duke of Cornwall’ is automatically given to whoever is the eldest surviving son (soon to be ‘child’) of the monarch and thus heir to the throne. The Duchy was created in 1337. The current Prince of Wales is the 25th Duke of Cornwall.

The Duchy of Cornwall Estate (131350 acres in 24 counties) produces a net surplus annually and this money is used by the Prince to meet his official and private commitments and those of his wife, the Duchess of Cornwall as well as his sons Princes William and Harry. He does not receive any monies from the government. Some of the revenue is also used to support the Prince’s charitable work. Although the income from the Estate is tax exempt, the Prince voluntarily pays tax on the revenues at the highest rate. Parliamentary legislation governs the activities of the Estate and in particular the rule that the investment portfolio must be run on a commercial basis. The Prince’s Council (chaired by the Prince of Wales) is responsible for overall guidance in the running of the Estate.

The Prince, in order to provide for future Dukes of Cornwall, must pass the Estate on either intact or in an improved state.

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The Crown Estate

The Crown Estate is, as the term suggests, an estate (land, property, investments) owned by the Crown. Its origins in the eleventh century can be traced to William the Conqueror and since that time, as one might imagine, there have been many changes in its size, wealth and income potential. In its current form (strictly controlled by statute) the Estate is worth approximately £8 billion and produces a revenue which varies from year to year but at the time of writing is somewhere around £240 million. Currently the monarchy receives 15% of this annual profit (always in arrears) and the remainder is given to HM Treasury. This money pays for the major expenses of the monarchy.

Under the term ‘major expenses’ comes Royal Household salaries, travel, maintenance of the official residences and the Chapels Royal, entertainment, utilities such as electricity, maintenance of parts of the Historic Royal Palaces, supplies, financing the Royal Mews etc.

Although the Crown Estate (CE) is owned by the Crown it is not, these days, the monarch’s personal estate. It has been integral to the financing of the Crown since it was first formed in the eleventh century and although it has varied in size and value over the years it has been the backbone of the monarchy ever since its inception. 85% of the revenue of the Estate is given to the government which at the time of writing stands at over £200 million.

The CE is run by a body appointed by the King and collectively called the Crown Estate Commissioners. They are independent of government but are accountable to parliament as well as the Crown. The CE is run under strict guidelines and is commercially responsible i.e. it is expected to ‘enhance its value and the return obtained from it, but with due regard to the requirements of good management’. (Crown Estate Act 1961, S. 1(3)

Whereas before 2012 the monarch received a grant (Civil List) from the government for expenses and when this grant was, after years of stagnation, increased there were cries from some that this was ‘taxpayers’ money’. In fact, even then, it was incorrect as the CE’s revenues were given completely to the government. Since the Sovereign Grant Act 2011 there can now be no question of any misunderstanding in respect to the financing of the monarchy: the monarchy funds itself from its own historic resources and what is more gives 85% of the profits of the resources of the CE to the government. It is quite wrong and entirely misleading for critics to keep repeating the lie of direct taxpayer funding.

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