Finances of the British Royal Family
The British Royal Family is financed mainly by public money. The British Parliament meets the cost of the Sovereign's official expenditure from public funds. This includes the costs of the upkeep of the various royal residences, staffing, travel and state visits, public engagements, and official entertainment. 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.
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 persisted from 1760 until 2012. The Civil List was paid from public funds and was intended to support the exercise of the monarch's duties as head of state of the United Kingdom. In modern times, the Government's profits from the Crown Estate always significantly exceeded the Civil List. Under the Civil List arrangements the Royal Family faced criticism for the lack of transparency surrounding Royal finances. The National Audit Office was not entitled to audit the Royal Household.
The Queen received an annual £7.9 million a year from the Civil List between 2001 and 2012. The total income of the Royal Household from the Treasury was always significantly larger than the Civil List because it included additional income such as Grants-in-Aid from the Treasury and revenues from the Duchies of Cornwall and Lancaster. The total Royal Household income for the financial years 2011-12 and 2012-13 was £30 million per annum, followed by a 14% cut in the following year. However, the Treasury provided an additional £1 million to pay for Diamond Jubilee celebrations in 2012.
Royal expenditure differs from income due to the use of a Reserve Fund, which can be added to or drawn from. The official reported annual expenditure of the Head of State was £41.5 million for the 2008-09 financial year. This figure did not include the cost of security provided by the police and the Army and some other expenses.
Under the Sovereign Grant Act 2011, the system of funding the Royal Household by a mixture of Civil List payments and Grants-in-Aid was replaced. From 1 April 2012 a single annual Sovereign Grant has been paid by the Treasury. The level of funding for the Royal Household is now linked to the Government's revenue from The Crown Estate.
The Sovereign Grant Annual Report states that the Sovereign Grant was £31 million for 2012-13, £36.1 million for 2013-14 and £37.9 million for 2014-15. The amount of the Sovereign Grant is 15% of the income account net surplus of the Crown Estate for the financial year that began two years previously. The arrangements will be reviewed by 2016 (subsection 7(5) of the Act). Step 4 of subsection 6(1), and subsection 6(4), of the Act provide a mechanism to prevent the amount of the Sovereign Grant increasing beyond what is necessary because of the growth in Crown Estate revenue. Under the Sovereign Grant the National Audit Office is able to audit the Royal Household.
Duchy of Lancaster
The Duchy of Lancaster is a Crown entity holding land and other assets in perpetual trust for the Sovereign. The Sovereign is not entitled to the capital of the portfolio or to capital profits. The revenue profits of the Duchy form part of the Privy Purse, and are distributed to the Sovereign to provide income for expenses not borne by the Sovereign Grant. In the financial year ending 31 March 2010, the Duchy was valued at £348 million, providing £13 million in income to the Royal Family.
Duchy of Cornwall
The Duchy of Cornwall is a Crown entity holding land and other assets to produce an income for the monarch's eldest child. The Duke of Cornwall (Charles, Prince of Wales) receives revenue towards charitable work and official activities, supported by The Queen's Grant-in-aid funding to provide assistance with official travel and property. These financial arrangements also cover the official expenditure of some members of his immediate family. The Duchess of Cornwall, The Duke and Duchess of Cambridge and Prince Harry all have their official expenses paid from Duchy income, assisted by grants-in aid from The Queen. For the fiscal year 2011-12 the Duchy was valued at £728 million with an annual profit of £18.3 million paid to the Prince.
The Duke of Edinburgh receives a parliamentary annuity of £359,000 per year from the Treasury. In the past some other members of the British Royal Family also received funding in the form of parliamentary annuities. The Civil List Act 1952 provided for an allowance to Princess Margaret as well as allowances to minor royals who undertook official duties. The Civil List Act 1972 added further members of the Royal Family to the annuity list. By 2002 there were eight recipients of parliamentary annuities (all children or cousins of the Queen) receiving a combined total of £1.5 million annually. Between 1993 and 2012 the Queen voluntarily refunded the cost of these annuities to the Treasury. The Sovereign Grant Act 2011 abolished all of these other than that received by the Duke of Edinburgh. Subsequently the living costs of the members of the Royal Family who carry out official duties, including the Princess Royal, the Duke of York, and the Earl and Countess of Wessex, have mainly been met through the Queen’s income from the Duchy of Lancaster.
The Crown has a legal tax-exempt status because certain acts of parliament do not apply to it. Crown bodies such as The Duchy of Lancaster are not subject to legislation concerning income tax, capital gains tax or inheritance tax. Furthermore, the Sovereign has no legal liability to pay such taxes. The Duchy of Cornwall has a Crown exemption and the Prince of Wales is not legally liable to pay income tax on Duchy revenues.
A Memorandum of Understanding on Royal Taxation was published on 5 February 1993 and amended in 1996, 2009 and 2013. The arrangements in the memorandum are considered to be permanent and it is intended that they will be followed by the next monarch. The memorandum describes the arrangements by which The Queen and The Prince of Wales make voluntary payments to the HM Revenue and Customs in lieu of tax to compensate for their tax exemption. The details of the payments are private. The Queen voluntarily pays a sum equivalent to income tax on her private income and income from the Privy Purse (which includes the Duchy of Lancaster) that is not used for official purposes. The Sovereign Grant is exempted. A sum equivalent to capital gains tax is voluntarily paid on any gains from the disposal of private assets made after 5 April 1993. Many of the Sovereign's assets were acquired earlier than this date but payment is only made on the gains made afterwards. Arrangements also exist for a sum in lieu of inheritance tax to be voluntarily paid on some of the Queen's private assets. Property passing from monarch to monarch is exempted, as is property passing from the consort of a former monarch to the current monarch.
The Prince of Wales voluntarily pays a sum equivalent to income tax on that part of his income from the Duchy of Cornwall that is in excess of what is needed to meet official expenditure. From 1969 he made voluntary tax payments of 50% of the profits, but this reduced to 25% in 1981 when he married Lady Diana Spencer. These arrangements were replaced by the memorandum in 1993. The income of the Prince of Wales from sources other than the Duchy of Cornwall is subject to tax in the normal way.
Private wealth of the Queen
The Queen has a private income from her personal investment portfolio, though her personal wealth and income are not known. Jock Colville, a former private secretary to the Queen (when she was Princess Elizabeth) and a director of her bank, Coutts, estimated her wealth at £2 million in 1971 (the equivalent of about £25 million today). Official Buckingham Palace statements in 1993 called estimates of £100 million "grossly overstated". Forbes magazine estimated the Queen's net worth at around US$500 million (about £325 million) in 2011. More recently, the U.K. Sunday Times, estimated personal net worth of $515 million (about £330 million), while an analysis by the Bloomberg Billionaires Index puts it at $425 million (about £275 million). Sandringham House in Norfolk and Balmoral Castle in Aberdeenshire are privately owned by the Queen.
The Crown Estate is one of the largest property owners in the United Kingdom, producing £211 million for the Treasury in the financial year 2007–8. and with holdings of £7.3 billion in 2011. The Crown Estate is not the private property of the Monarch. It cannot be sold or owned by the Sovereign in a private capacity, nor do any revenues, or debts, from the estate accrue to her. Instead the Crown Estate is owned by the Crown, a corporation representing the legal embodiment of the State. It is held in trust and governed by Act of Parliament, to which it makes an annual report. 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.
Assets held in trust
A number of State possessions are held in trust by the Sovereign.
- The Royal Collection is the art collection of the British Royal Family. It is one of the largest and most important art collections in the world, containing over 7,000 paintings, 40,000 watercolours and drawings, about 150,000 old master prints, historical photographs, tapestries, furniture, ceramics, books, gold and silver plate, arms and armour, jewellery and other works of art. The collection includes the Crown Jewels in the Tower of London (including the crown, orb and sceptre). It is physically dispersed between thirteen Royal residences and former residences across the UK. It is the property of the monarch as Sovereign but is not a private possession owned by the Queen personally. Instead it is state-owned and held in trust for the Queen's successors and the nation. The Treasury refers to these assets as "vested in the sovereign and cannot be alienated". Income is generated by the collection from public admissions and other sources. This income is received by the Royal Collection Trust, the collection's management charity, and not by the Queen.
- The occupied royal palaces in the United Kingdom such as Buckingham Palace and Windsor Castle are held in trust and do not belong to the Sovereign personally. The Royal Household is expected to use the Sovereign Grant to maintain the palaces. In 2010, the Royal Household requested an additional grant from the Department for Culture, Media and Sport "aimed at schools, hospitals, councils and housing associations for heating programmes which benefit low-income families". Over a third of the Royal estate was in disrepair by 2012-13 according to a report by the Public Accounts Committee. The cost of restoration was estimated to be £50 million, but the Reserve Fund was at a historic low of £1m. The Monarch is also responsible for using the Sovereign Grant to pay the wages of 431 of the approximately 1200 Royal Household staff, amounting to £18.2 million in 2014-15. In 2013, the Guardian newspaper reported that Buckingham Palace was using zero-hour contract for its summer staff and in 2015 it was reported that at least four senior officials had been made redundant to reduce costs.
- Royal Finances: The Civil List, Official web site of the British Monarchy, retrieved 18 June 2010
- The Privy Purse and Treasurer's Office, accessed 13 June 2010
- "Royals 'cost the taxpayer £37.4m'". BBC News. 28 June 2006.
- Verkaik, Robert (28 June 2002). "First look at royal finances fails to satisfy MPs". The Independent (London).
- Royal Finances: Head of State Expenditure, Official web site of the British Monarchy, retrieved 18 June 2010
- "Spending Review: Royal family to face 14% cuts". BBC News. 20 October 2010.
- Verkaik, Robert (21 October 2010). "Royal 'cuts' could make Charles the richest king in British history". The Independent (London).
- "Cost of Royal Family rises £1.5m". BBC News. 29 June 2009.
- "Sovereign Grant Annual Report 2012-13". The Official Website of the British Monarchy. Retrieved 26 February 2014.
- "Royal funding changes become law". BBC News. 18 October 2011.
- "Determination of the amount of Sovereign Grant". www.legislation.gov.uk. Retrieved 31 January 2014.
- "Privy Purse and Duchy of Lancaster". Royal Household. Retrieved 2011-09-30.
- "Annual Report 2013" (PDF). Duchy of Lancaster. 31 March 2013.
- Royal Finances: Privy Purse and Duchy of Lancaster, Official web site of the British Monarchy, retrieved 18 June 2010
- "Who pays for The Duke and Duchess of Cambridge and Prince Harry?". The Prince of Wales and The Duchess of Cornwall Website. Retrieved 30 January 2014.
- "Annual Report and Accounts Year Ended 31st March 2012" (PDF). Duchy Of Cornwall. 1 June 2012. Retrieved 2 February 2014.
- "What Is The True Cost Of The Monarchy?". Royal Central. 17 February 2013. Retrieved 26 February 2014.
- Verkaik, Robert (30 May 2002). "Royal aides want to see abolition of Civil List". The Independent (London). Retrieved 1 February 2014.
- "Further provision for members of the Royal Family". http://www.legislation.gov.uk. Retrieved 1 February 2014.
- "Memorandum of Understanding on Royal Taxation" (PDF). HM Government. 2013. Retrieved 25 February 2014.
- Rayner, Gordon (21 Jun 2015). "Queen's finances are safe from cuts for two years". The Telegraph (London). Retrieved 3 July 2015.
- Goldsmith, Vivien (12 February 1993). "The Queen's Finances: Ordinary tax allowances for royals". The Independent (London).
- Philip Hall, 1992, Royal Fortune, Tax, Money and the Monarchy, page xxii, Bloomsbury, ISBN 0-7475-1098-9
- "Royal overspend prompts call to open palace doors". BBC News. 28 January 2014.
- UK CPI inflation numbers based on data available from Gregory Clark (2015), "The Annual RPI and Average Earnings for Britain, 1209 to Present (New Series)" MeasuringWorth.
- The Times, 9 July 1971; Pimlott, p. 401.
- Lord Chamberlain Lord Airlie quoted in Hoey, p. 225 and Pimlott, p. 561
- Kroll, Luisa. "Just How Rich Are Queen Elizabeth And Her Family?". Forbs,com. Forbs. Retrieved 20 October 2015.
These monied monarchs can well afford it. Queen Elizabeth, 85, has an estimated personal net worth of $500 million that comes from property holdings including Balmoral Castle in the Scottish Highlands, stud farms, a fruit farm and marine land throughout the U.K.; extensive art and fine jewelry; and one of the world’s largest stamp collections built by her grandfather.
- Kirkpatrick, Nick (September 8). "Britain's soon to be longest-reigning monarch, by the numbers". Washington post. Retrieved 20 October 2015. Check date values in:
- John, Tara (June 1, 2015). "The Queen has a private income, a government grant and revenues from estates". Time.com. Time. Retrieved 20 October 2015.
With an estimated personal net worth of $515 million, Queen Elizabeth II is among the world's richest women, according to the U.K. Sunday Times.
- Metcalf, Tom. "Queen Elizabeth II Isn't as Rich as You Think". bloomberg.com. bloomberg. Retrieved 20 October 2015.
- The Royal Residences: Overview, Royal Household, retrieved 9 December 2009
- About Us, Crown Estate, 6 July 2011, retrieved 1 September 2011
- FAQs, Crown Estate, retrieved 1 September 2011
- Martin Delgado and Christopher Leake (24 October 2010). "Queen's £38m a year offshore windfarm windfall - because she owns the seabed". London: Mail Online. Retrieved 31 January 2014.
- "Royal Special: Sovereign wealth". The Independent (London). 31 May 2002.
- What is the Royal Collection?, The Royal Collection, retrieved 12 November 2008
- "Queen asked for heating grant from Government". The Daily Telegraph (London). 24 September 2010.
- Younger, Rachel (28 January 2014). "Royal Estate Overspend Leaves £50m Repair Bill". Sky News (London). Retrieved 27 May 2015.
- Palmer, Richard (30 May 2015). "Royal Family faces major financial review as costs soar by a third in three years". Daily Express (London). Retrieved 3 July 2015.
- Simon Neville, Matthew Taylor and Phillip Inman. "Buckingham Palace uses zero-hours contracts for summer staff | Money". The Guardian. Retrieved 2015-09-07.
- Sabur, Rozina (23 May 2015). "Buckingham Palace 'axes at least four' of the Queen's senior officials". The telegraph (London). Retrieved 27 May 2015.