Does UK tax go to the Royal Family?

So, does the UK tax go to the Royal Family? The big question on everyone’s lips, especially since the recent passing of the Queen.

The short answer is yes, some UK tax does go to the Royal Family. This is most commonly through the Sovereign Grant. But let’s take a look at how much of taxpayers money is actually paid to the Royal Family.

What exactly is the Sovereign Grant?

Back in 2011, the government introduced the Sovereign Grant Act:

An annual payment to the Royal Family
It funds the Royal Family’s official duties, e.g providing enough Prosecco for the swanky garden parties 🍾
It also funds staff and maintenance of the royal palaces
The 2022-2023 Sovereign Grant was around £86 million a year but can exceed £369 million if the palace urgently requires 30 more clocks
This money comes from HM Treasury and is funded by the taxpayer
Royals do not pay tax on income from the Sovereign Grant

Not all royals are funded by the Sovereign Grant though, so that’s less people for King Charles to share the money with!

So, is that everything?

Actually, no. The Sovereign Grant doesn’t include 24/7 personal security for senior royals which is also publicly-funded. The actual figure of how much is spent on security remains a secret as there is a high chance it could ‘compromise the safety of the royals’.

Royal ceremonies are also left out of the Sovereign Grant, and can cost taxpayers millions of pounds. So we’ll have to bear that in mind the next time a royal pops the question!

So the taxpayer pays for everything?

Not everything! Surprisingly, a whopping £86 million isn’t enough to cover all of the Royal Family costs. So, the Royal Family have multiple streams of income:

How much do the Royal Family bring into the UK economy?

So we know the Royal Family splashes a large portion of UK tax money on official duties, central staffing, maintenance, and security. But how much revenue does the Royal Family bring to the economy?

Well, you can’t visit the UK without visiting a royal resident hotspot, can you?! Buckingham Palace, Windsor Castle and Frogmore House are just some of the royal tourist attractions which bring in tens of millions of pounds every year.

Besides ticket sales, the Royal Family also bring in revenue from:

Souvenirs
Hampers
Publishing
Gift shop sales (who doesn’t love a Queen Elizabeth bobblehead?)

All in all, the Royal Family can easily bring in £71 million pounds a year just for being the Royal Family! We can only dream!

Does the Royal Family pay tax?

The Royal Family aren’t liable to pay tax, but some choose to in some cases. For example Queen Elizabeth voluntarily paid taxes on:

Capital Gains profits
Selected income

Here’s where it gets rather interesting:

‘Sovereign to sovereign’ inheritance is not liable for tax. This means that King Charles will not pay the standard 40% tax after inheriting his late mother’s assets which are valued well over a billion pounds.

He has instead opted to follow in the footsteps of the Queen by paying income tax on selected income, what a generous King! 👌

The rules are clearly a bit different for royals so as mentioned, they aren’t taxed on the income they receive from the Sovereign Grant. That would essentially be taking money from the taxpayer just to give some back, which would be a bit confusing and some may say, pointless.

For a full breakdown of which members of the Royal Family pay taxes, and what taxes they pay, read our ‘The UK royals who pay their taxes’ blog.

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As a tax expert with a deep understanding of the intricate financial mechanisms involving the British Royal Family, it's crucial to clarify and expand upon the concepts mentioned in the article to provide a comprehensive understanding.

Sovereign Grant:
- The Sovereign Grant is an annual payment made by the government to the Royal Family, introduced in 2011 through the Sovereign Grant Act.
- It funds official duties, staff salaries, and maintenance of royal palaces, including expenditures for events like garden parties.
- The 2022-2023 Sovereign Grant was £86 million annually but can increase, potentially reaching £369 million for urgent palace needs.
Funding Sources for the Royal Family:
- The Sovereign Grant is funded by HM Treasury, which, in turn, is financed by taxpayers.
- Royals do not pay taxes on income received from the Sovereign Grant.
- Not all members of the Royal Family are funded by the Sovereign Grant; some have alternative income sources.
Royal Security:
- 24/7 personal security for senior royals is publicly funded but is not part of the Sovereign Grant.
- The actual expenditure on security is undisclosed to prevent compromising the safety of the royals.
Additional Costs Not Covered by Sovereign Grant:
- Royal ceremonies and certain expenses are not covered by the Sovereign Grant and can cost taxpayers millions.
- The Royal Family has multiple streams of income, including inherited estates, personal assets, an investment portfolio, and the Privy Purse/Duchy of Lancaster, generating around £24 million annually.
Economic Contributions of the Royal Family:
- The Royal Family contributes significantly to the UK economy through royal attractions like Buckingham Palace and Windsor Castle, generating tens of millions annually.
- Revenue is also generated from souvenirs, hampers, publishing, and gift shop sales, contributing to an estimated £71 million per year.
Taxation of the Royal Family:
- The Royal Family is not obligated to pay taxes, but some members, like Queen Elizabeth, voluntarily pay taxes on capital gains profits and selected income.
- "Sovereign to sovereign" inheritance is not subject to tax, meaning King Charles will not pay the standard 40% tax on his late mother's assets.
- King Charles has chosen to follow Queen Elizabeth's example by paying income tax on selected income.

Understanding these concepts provides a nuanced perspective on the financial dynamics of the British Royal Family, addressing questions about funding sources, economic contributions, and the voluntary taxation practices of its members.

Does UK tax go to the Royal Family? – TaxScouts (2024)