The Economist explains

Where does Britain’s royal family get its money from?

The monarchy is funded by a mix of government largesse and private assets

Editor's note (April 26th 2023): This article has been updated since publication.

WHEN HIS MOTHER died in September, King Charles III inherited more than just the crown. Under a deal struck by Queen Elizabeth II with John Major’s government in 1993, British monarchs are exempt from inheritance tax when they pass on assets to the heir to the throne. The Sunday Times, a British newspaper, recently estimated the king’s private wealth to be £600m ($745m), much more than the queen’s fortune at the time of her death, which it believed to be £370m. The royal family’s total assets are worth many times that, and the distinction between public and private wealth can be blurry. The Guardian, another paper, puts the king’s fortune at £1.8bn. Where does Britain’s royal family get its money from?

As head of state, the monarch technically owns the crown estate, a collection of land and assets that includes Ascot racecourse, a big chunk of central London and half of the foreshore (the coastal land between the high and low tide marks) in England, Northern Ireland and Wales. But the crown estate is run independently, and its profits—almost £313m last year—go to the government. Some of this money is then given back to the royal household. Until 2012 this was done under the “civil list”. This was worth £13.7m in 2011, most of which was used to pay staff. In addition, the monarchy received “grants in aid” to cover travel, communications and the upkeep of palaces. In 2011 that amounted to £18.4m (£6m for travel, £11.9m for property and £500,000 for communications). In 2012, however, this funding was replaced by a single payment, the “sovereign grant”. This has risen rapidly, notably in 2016 to cover a pricey, decade-long refurbishment of Buckingham Palace, which is crumbling. (In 2007 falling masonry narrowly missed Princess Anne’s car.) The sovereign grant is now set at 25% of the crown estate’s annual profits (it will revert to 15% in 2027), and last year paid out £86.3m.

On top of this, the family pockets the income from the Duchies of Lancaster and Cornwall, which the king and Prince William inherited as the monarch and Prince of Wales, respectively. These private estates are made up of land, property and financial assets. In 2017 it emerged that the Duchy of Lancaster invested millions in a Cayman Islands fund. (Duchy Originals, a company set up by Prince Charles to sell expensive biscuits and other “natural food”, is separate and its profits go to charity.) Last year the duchies’ assets were worth a combined £1.7bn, and they made annual profits of around £48m between them. This money pays for the royals’ private expenses. Both King Charles and Prince William pay income tax on their income from the duchies, although they are not obliged to do so. Finally, although many of the palaces in which the royals live are held on behalf of the country, and so cannot be sold, they have other private property too. The king, for example, inherited two country estates, Balmoral in Scotland and Sandringham in Norfolk, from his mother.

This mix of private and government-funded income explains the royal family’s wealth, but does little to answer thornier questions over the monarchy’s value. Quantifying its contribution to Britain’s soft power is impossible—though royalists point out, for example, that crown-loving tourists flock to Britain. Queen Elizabeth’s portrait featured on more currencies than any contemporaneous figure. King Charles’s will appear on ever fewer. But of those notes on which his visage is an assured presence—pound sterling—he will maintain quite a collection.

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