How the Royal Family is funded
Following the death of Queen Elizabeth at Balmoral on Thursday, the crown, along with her private estate, will be passed down to her first son, now King Charles III.
The Queen was the first British monarch to mark 70 years on the throne, during which time she built a substantial private property and investment portfolio as well as preserving jewels and historic treasures including art.
The late Queen also owned Balmoral and Sandringham Estates outright, after inheriting them from her father George VI.
Although it is unknown what the Queen's exact net worth was, it was estimated to be around ￡370m ($432m), but missed out on a spot on The Sunday Times' 2022 "Rich List" of the UK's 250 wealthiest.
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While questions about how the Royal Family makes it money have circled for years, the Royal Family's wealth does not all come from taxpayer as many people mistakenly think.
As Charles's reign starts, how does the Royal Family earn its money, and where does it comes from?
Who funds the Royal Family?
Some members of the royal household earn a salary, Charles, William, now the Prince of Wales, and Harry, Duke of Sussex, all earned salaries from their military careers.
Princess Beatrice, who is 9th in line for the throne works in finance and consulting and her sister Princess Eugenie is an associate director at an art gallery in London.
Funding for the royals was reformed in 2012 with a new sovereign grant paid out of a proportion of the profits from the crown estate, which manages the public estate of the monarch.
The new system means the royal household is subject to the same audit scrutiny, by the National Audit Office and the parliamentary public accounts committee, as other government expenditure.
However, "The Firm's" main income comes from three sources — the sovereign grant, the Duchy of Lancaster estate and the Duchy of Cornwall.
Sovereign grant
Every year the Royal Family gets a single chunk of cash from the UK government, that is paid for by taxpayers.
This yearly payment was known as the civil list until the introduction of the Sovereign Grant Act in 2011.
It is used to pay for His Majesty's official duties and upkeep of the occupied royal palaces, including Buckingham Palace, Windsor Castle and St James’ Palace.
The royal household receives the grant in exchange for all the profits made from the Crown Estate — a massive collection of property around the UK that is owned by the monarch but run independently.
In theory, this means that the reigning monarch is given an amount of money equivalent to 25% of the Crown Estate's profits every year.
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In 2021-2022, the sovereign grant was ￡86.3m. That equates to roughly ￡1.29 per person in the UK, and is about a quarter of the ￡313m made by the Crown Estate.
Despite becoming King, Charles is not allowed to sell any of the royal residences to make money as they’re not his private property — they will have to be passed on to his successor, his son William, who will also have to pass them down to his son Prince George — who is third in line to the Crown.
What is the Crown Estate?
The Crown Estate is a collection of lands and properties belonging to the British monarch including properties on London’s Regent Street and St James’s as well as malls and retail parks across the UK, and rights to seabeds around the British Isles.
For the financial year 2021/22 the value of the Crown Estate's property portfolio increased 8% to ￡15.6bn. In June it posted a net revenue profit of ￡312.7m for the year.
All of the registered company’s profits go to the UK Treasury, which passes on 25% of profits — with a two-year time lag — to the reigning monarch through the sovereign grant.
Under the Sovereign Act 2011, in the event the Crown Estate's profits fall, the monarch still receives the same grant as the year before, which is topped up by the Treasury.
Duchy of Lancaster and the Privy Purse
The Duchy of Lancaster is administered separately from the Crown Estate and is headed by the chancellor of the Duchy of Lancaster, currently Nadhim Zahawi MP who was appointed on 6 September by new prime minister Liz Truss.
The private estate of the Queen, has now passed on to Charles. This private estate is usually passed down from monarch to monarch.
It covers more than 18,000 hectares of land, including in Yorkshire, central London and Lancashire, with a net asset value of ￡653m at the last count.
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King Charles can turn to the Privy Purse — another name for the net profits made from the Duchy of Lancaster — when expenditure cannot be met by the sovereign grant.
Considering the duchy is inherited, King Charles can technically avoid paying millions in inheritance tax thanks to an old rule designed to protect the Royal Family’s wealth.
The rule, introduced by the government in 1993, states that an inheritance levy does not have to be paid on assets transferred from one sovereign to another.
UK law requires inheritance tax to be paid at 40% if you leave assets valued at above a certain threshold to your loved ones after you pass away.
Duchy of Cornwall
Whoever holds the title of Duke of Cornwall — usually the first in line to the throne — benefits from the income generated from the Duchy of Cornwall.
William, Duke of Cambridge also became Duke of Cornwall when his father ascended to the throne after the passing of the Queen.
The Duchy of Cornwall mainly covers land in south-west England and generates around ￡20m a year — although it made a profit of ￡22m for the year ending 31 March 2022, according to the duchy’s financial records.
The Duchy of Cornwall is not considered a company, meaning William does not have to pay corporation tax, and in addition he will not be considered liable for capital gains tax.
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However, King Charles, who previously held the title, chose to voluntarily pay the top rate of income tax, currently 45%, on the duchy’s earnings after the deduction of official expenditure, known as its "surplus", totalling ￡23m in the last financial year.
As the Duchy of Lancaster and Duchy of Cornwall are private estates, the way that the money is spent is not made public.
In 2022 the assets of the Duchies are worth a combined ￡1.7bn, making profits of more than ￡40m between them.