So, does the Royal Family benefit from UK taxes? The main query on everyone's mind, especially in light of the Queen's recent passing.
Yes, some UK tax does go to the Royal Family, to give the quick response. The Sovereign Grant is the most popular method for doing this. Let's examine how much taxpayer money is truly given to the Royal Family, though.
What does the Sovereign Grant actually mean?
The Sovereign Grant Act was first introduced by the government in 2011:
a yearly gift to the Royal Family
It provides money for the Royal Family's formal activities, such as buying enough prosecco for the posh garden parties.
Additionally, it supports the employees and upkeep of the royal palaces.
The Sovereign Grant for 2022–2023 is around £86 million per year, but it might reach £369 million if the palace urgently needs 30 more clocks.
This funding is provided by the taxpayer and comes from HM Treasury.
Income from the Sovereign Grant is exempt from taxation for royals.
However, not all royals receive funding from the Sovereign Grant, therefore King Charles has fewer recipients to distribute his resources to.
So, is that all there is?
No, actually. The Sovereign Grant does not cover senior royals' 24/7 personal security, which is also publicly supported. Since there is a good probability it could "jeopardise the safety of the royals," the exact amount spent on security is kept a secret.
Additionally excluded from the Sovereign Grant are royal festivities, which can run taxpayers millions of pounds. The next time a royal proposes, we'll have to keep that in mind!
So everything is covered by the tax payer?
Not all of it! Surprisingly, the Royal Family's expenses exceed the staggering £86 million. The Royal Family so has numerous sources of income:
inherited properties, such as Balmoral Castle
Personal property, such as artwork
An assortment of investments
The Privy Purse/Duchy of Lancaster is a collection of land in England and Wales and other private holdings that generates about £24 million a year in revenue.
The Royal Family is estimated to be worth a whopping £24 billion, although it's safe to assume that the taxpayers don't cover the entire amount.
What contribution does the Royal Family make to the UK economy?
We are aware that the Royal Family spends a significant amount of UK tax money on official functions, administration, maintenance, and security. How much money does the Royal Family contribute to the economy, though?
Well, it stands to reason that you must stop by a royal resident hotspot while in the UK. A few of the royal tourist destinations that bring in tens of millions of pounds annually are Buckingham Palace, Windsor Castle, and Frogmore House.
In addition to ticket sales, the Royal Family receives money from:
Sales in the gift shop for souvenirs Hampers Publishing (who doesn't adore a Queen Elizabeth bobblehead?)
The Royal Family can easily earn £71 million a year merely by virtue of being the Royal Family, all things considered. One can only hope!
The Royal Family: Do they pay taxes?
The Royal Family is not required to pay taxes, but some members prefer to do so sometimes. Queen Elizabeth, for instance, freely paid taxes on:
earnings from capital gains
chosen income
This is where things start to get interesting:
Inheritance from "sovereign to sovereign" is not taxed. This implies that after receiving his late mother's assets, which are worth well over a billion pounds, King Charles won't have to pay the customary 40% tax.
Instead, he has chosen to pay income tax on a portion of his income, just like the Queen. What a kind King!
Royals are exempt from taxes on the income they receive from the Sovereign Grant because the regulations are obviously a little different for them, as was already mentioned. That would essentially be taking money from the taxpayer in order to give some back, which is a little unclear and, some could argue, unnecessary.
Read our blog post titled "The UK royals who pay their taxes" for a detailed breakdown of which members of the Royal Family pay taxes and what taxes they pay.
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