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The British Royal Family receives money from a number of sources both public and private. The official reported annual cost to the British Public of keeping the Royal Family was £41.5M for the 2008-09 period.^[1] This figure is disputed as the real cost since it does not include the cost of security provided by the Police and the Army, the lost revenue of the Duchies of Cornwall and Lancaster and other expenses.

Parliament meets much of the sovereign's official expenditure from public funds, known as the Civil List and the Grants-in-Aid. An annual Property Services Grant-in-Aid pays for the upkeep of the royal residences, and an annual Royal Travel Grant-in-Aid pays for travel. The Civil List covers most expenses, including those for staffing, state visits, public engagements, and official entertainment. Its size was fixed by Parliament every 10 years; any money saved was carried forward to the next 10-year period.^[2]

From 2013, the Civil List and Grants-in-Aid will be replaced by a single Sovereign Grant, which will be 15% of the surplus generated by the Crown Estate.

[edit] Estimates of costs and wealth

The total cost of the monarchy is estimated by the openly anti monarchy pressure group Republic to be between £134 and £184 million per year.^[3]

In comparison the Spanish Royal Household costs 8.9M Euro or around £7.4M.^[4] According to the British Republican campaign, the Presidency of the Irish Republic costs £1.8m and the German Presidency £26m.^[5]

Until 1760 the monarch met all official expenses from hereditary revenues, which included the profits of the Crown Estate (the royal property portfolio). King George III agreed to surrender the hereditary revenues of the Crown in return for the Civil List, and this arrangement persists. The Crown Estate is one of the largest property owners in the United Kingdom, with holdings of £7.3 billion in 2011.^[6] It is held in trust, and cannot be sold or owned by the Sovereign in a private capacity.^[7] In modern times, the profits surrendered from the Crown Estate have exceeded the Civil List and Grants-in-Aid.^[2] For example, the Crown Estate produced £200 million for the Treasury in the financial year 2007–8, whereas reported parliamentary funding for the monarch was £40 million during the same period.^[8]

From 2013, the Civil List and Grants-in-Aid will be replaced by a single Sovereign Grant, which will be 15% of the surplus generated by the Crown Estate. The changes were introduced by the Sovereign Grant Act 2011. The annual amount will be calculated on the revenue from two years previously, and the arrangements will be reviewed by 2020.^[9]

Forbes magazine estimated the Queen's net worth at around US$450 million in 2010,^[10] Official Buckingham Palace statements in 1993 called estimates of £100 million "grossly overstated",^[11] and Jock Colville, a former private secretary of the Queen and a director of her bank, Coutts, estimated her wealth at £2 million in 1971 (the equivalent of about £21 million today^[12]).^[13]

[edit] Crown Jewels

Jewels in the Tower of London (including the crown, orb and sceptre) are state-owned rather than private possessions, the Treasury referring to these assets as "vested in the sovereign and cannot be alienated".^[14]

[edit] Keeper of the Privy Purse

The Keeper of the Privy Purse is Head of the Privy Purse and Treasurer’s Office and has overall responsibility for the management of the sovereign’s financial affairs.^[15]

[edit] Civil list

The Queen receives £7,900,000 a year from public funds to support the exercise of her duties as head of state of the United Kingdom (the Head of State Expenditure).

[edit] Parliamentary annuities

Parliamentary annuities of £1,254,000 a year are refunded by the Queen from her private funds.^[16]

[edit] Royal palaces

The occupied palaces in the United Kingdom such as Buckingham Palace and Windsor Castle are held in trust and do not belong to the Sovereign personally.^[17]

[edit] Duchy of Lancaster

Like the Crown Estate, the land and assets of the Duchy of Lancaster, a property portfolio valued at £383 million in 2011,^[18] are held in trust. The revenues of the Duchy form part of the Privy Purse, and are used for expenses not borne by the Civil List.^[19]

[edit] Duchy of Cornwall

The Prince of Wales receives revenue from the Duchy of Cornwall, a property portfolio held in trust to meet the expenses of the monarch's eldest son.

[edit] Private estates

Sandringham House in Norfolk and Balmoral Castle in Aberdeenshire are privately owned by the Queen.^[17]

[edit] Royal Collection

The Royal Collection, which includes artworks and the Crown Jewels, is not owned by the Queen personally and is held in trust.^[20]

[edit] Taxation

Members of the Royal Family other than The Queen and The Prince of Wales are subject to tax in the ordinary way.^[21] There is a Memorandum of Understanding on Royal Taxation which records the arrangements for the payment of tax by the Queen and the Prince of Wales.^[22][23] Only a proportion of capital gains arising on assets belonging to the Privy Purse are subject to capital gains tax the Memorandum of Understanding justifies this on the basis that the Privy Purse meets both public and private expenditure. The proportion of gains and losses to be taken into account is:

(A - B)/A

where:
A is the Privy Purse income
B is any excess of Privy Purse expenses over Duchy of Lancaster income.^[24]

The Prince of Wales is not required to pay tax on his income from the Duchy of Cornwall but in all other respects is subject to tax in the normal way.^[25] In 1969 Prince Charles made voluntary tax payments of 50% of profits from the Duchy but this reduced to 25% in 1981 when he married Lady Diana Spencer.^[26]

The Official Expenditure of the Queen and the Prince of Wales is regarded as tax deductible, the rules on what constitutes Official Expenditure are set in the Memorandum of Understanding.^[27] Property passing from monarch to monarch is exempt from Inheritance Tax, as is property passing from the consort of a former monarch to the current monarch.^[28]

[edit] Transparency

The Royal Family has faced criticism for the lack of transparency surrounding Royal finances.^[29] The National Audit Office is not entitled to audit the Royal Household.^[30]

[edit] Future funding

It was announced in October 2010 that the Royal Household would face a freeze on its funding in the financial years 2011/12 and 2012/13 at £30m, followed by cuts of 14%.^[31][32] The Treasury will provide an additional £1m to pay for Diamond Jubilee celebrations in 2012.^[33] Furthermore it was stated that after that the Royal household funding would be linked to revenue from The Crown Estate.^[34] Revenue from The Crown Estate is thought to be due to double in real terms in the period to 2020 with additional lease revenues deriving from the development of Offshore Wind Farms within the UK's Renewable Energy Zone, the rights of which were granted to The Crown Estate by the Energy Act 2004.

[edit] References

1. ^ "Cost of Royal Family rises £1.5m". BBC News. 29 June 2009. http://news.bbc.co.uk/1/hi/uk/8124022.stm. 
2. ^ ^{a b} Royal Finances: The Civil List, Official web site of the British Monarchy, http://www.royal.gov.uk/TheRoyalHousehold/Royalfinances/Sourcesoffunding/TheCivilList.aspx, retrieved 18 June 2010 
3. ^ Royal Finances, Republic campaign website, http://republic.org.uk/What%20we%20want/In%20depth/Royal%20finances/index.php, retrieved 23 May 2011 
4. ^ 8.9M Euro or around £7.4M, http://www.casareal.es/laCasa/laCasa-iden-idweb.html
5. ^ Royal Finances, Republic campaign website, http://republic.org.uk/What%20we%20want/In%20depth/Royal%20finances/index.php, retrieved 23 May 2011 
6. ^ About Us, Crown Estate, 6 July 2011, http://www.thecrownestate.co.uk/about_us.htm, retrieved 1 September 2011 
7. ^ FAQs, Crown Estate, http://www.thecrownestate.co.uk/tce_faqs.htm, retrieved 1 September 2011 
8. ^ Royal Finances: Head of State Expenditure, Official web site of the British Monarchy, http://www.royal.gov.uk/LatestNewsandDiary/Pressreleases/2009/HeadofStateExpenditure29June2009.aspx, retrieved 18 June 2010 
9. ^ "Royal funding changes become law". BBC. 18 October 2011. http://www.bbc.co.uk/news/uk-15345351. 
10. ^ Serafin, Tatiana (7 July 2010), "The World's Richest Royals", Forbes, http://www.forbes.com/2010/07/07/richest-royals-wealth-monarch-wedding-divorce-billionaire.html, retrieved 13 January 2011 
11. ^ Lord Chamberlain Lord Airlie quoted in Hoey, p. 225 and Pimlott, p. 561
12. ^ UK CPI inflation numbers based on data available from Lawrence H. Officer (2010) "What Were the UK Earnings and Prices Then?" MeasuringWorth.
13. ^ The Times, 9 July 1971; Pimlott, p. 401).
14. ^ "Royal Special: Sovereign wealth". The Independent (London). 31 May 2002. http://www.independent.co.uk/news/uk/home-news/royal-special-sovereign-wealth-606169.html. 
15. ^ The Privy Purse and Treasurer's Office, accessed 13 June 2010
16. ^ http://www.royal.gov.uk/LatestNewsandDiary/Factfiles/Royalfinances.aspx
17. ^ ^{a b} The Royal Residences: Overview, Royal Household, http://www.royal.gov.uk/TheRoyalResidences/Overview.aspx, retrieved 9 December 2009 
18. ^ Accounts, Annual Reports and Investments, Duchy of Lancaster, 18 July 2011, http://www.duchyoflancaster.com/management-and-finance-2/accounts-annual-reports-and-investments/, retrieved 18 August 2011 
19. ^ Royal Finances: Privy Purse and Duchy of Lancaster, Official web site of the British Monarchy, http://www.royal.gov.uk/TheRoyalHousehold/Royalfinances/Sourcesoffunding/PrivyPurseandDuchyofLancaster.aspx, retrieved 18 June 2010 
20. ^ What is the Royal Collection?, The Royal Collection, http://www.royalcollection.org.uk/default.asp?action=article&ID=9, retrieved 12 November 2008 
21. ^ http://www.whatdotheyknow.com/request/11099/response/33193/attach/html/2/1624%2009%20response%202%20July%202009.pdf.html
22. ^ http://www.whatdotheyknow.com/request/8619/response/21599/attach/3/amending%20mou.pdf
23. ^ http://www.hm-treasury.gov.uk/foi_royalfinance_2009.htm
24. ^ Memorandum of Understanding 1993
25. ^ http://www.hm-treasury.gov.uk/foi_royalfinance_2009.htm
26. ^ Philip Hall, 1992, Royal Fortune, Tax, Money and the Monarchy, page xxii, Bloomsbury, ISBN 0-7475-1098-9
27. ^ http://www.hm-treasury.gov.uk/foi_royalfinance_2009.htm
28. ^ Goldsmith, Vivien (12 February 1993). "The Queen's Finances: Ordinary tax allowances for royals". The Independent (London). http://www.independent.co.uk/news/uk/the-queens-finances-ordinary-tax-allowances-for-royals-1472424.html. 
29. ^ "The mysteries of the royal finances are symptomatic of the monarchy's lack of openness and accountability" Peter Tatchell Royals 'cost the taxpayer £37.4m'
30. ^ Verkaik, Robert (28 June 2002). "First look at royal finances fails to satisfy MPs". The Independent (London). http://www.independent.co.uk/news/uk/home-news/first-look-at-royal-finances-fails-to-satisfy-mps-646606.html. 
31. ^ "Spending Review: Royal family to face 14% cuts". BBC News. 20 October 2010. http://www.bbc.co.uk/news/uk-11587991. 
32. ^ http://cdn.hm-treasury.gov.uk/sr2010_chapter2.pdf
33. ^ Verkaik, Robert (21 October 2010). "Royal 'cuts' could make Charles the richest king in British history". The Independent (London). http://www.independent.co.uk/news/uk/politics/royal-cuts-could-make-charles-the-richest-king-in-british-history-2112315.html. 
34. ^ http://cdn.hm-treasury.gov.uk/sr2010_chapter2.pdf

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