Unlike many of his citizens, King Charles III will not have to pay UK inheritance tax on the fortune he has inherited from his mother, the late Queen Elizabeth II.
Under an agreement made with the monarchy in the 1990s, the then Prime Minister John Major announced that assets passing from the sovereign to their successor were not subject to inheritance tax, NPR reports.
In the UK, people pay inheritance tax on the proportion of an estate that is valued above the threshold of £325,000, though that does not apply in certain circumstances.
Capital taxation
The exemption made in 1993 was part of a broader tax deal, where Mr Major warned that the assets of the monarchy were in danger of being “salami-sliced away” by capital taxation, changing the institution in a way “few people in this country would welcome”.
The Queen and her heir agreed to pay personal income taxes after they had volunteered to do so. With Charles’ accession to the throne, the Queen’s Duchy of Lancaster has passed to Charles, while the Duchy of Cornwall has passed from him to William
The duchies have belonged to the reigning monarch and his or her heir since the 1300s and are additional to the late Queen’s personal fortune, estimated to be hundreds of millions of pounds.
Real estate in London
The Duchy of Lancaster includes real estate in London, 10 castles, farmland and an airfield, and is also worth more than £650 million, delivering a net surplus of about £24 million. The monarchy forcibly seized most of the land holdings hundreds of years ago.
David McClure, the author of the book The Queen’s True Worth, said the Duchy of Lancaster ought to be owned by the state, but because the situation had gone on for centuries, nothing had been done.
The Duchy of Cornwall’s recent audit lists generated income of £21.7 million in 2017–18. In addition, the right to ownerless property in Cornwall (when people die without leaving a valid will and appear to have no next of kin), operates in favour of the holders of the duchies rather than the Crown, and assets belonging to dissolved companies with a registered office was in Cornwall, pass to the duchy.
The sovereign also receives millions of pounds through an annual grant from the Crown Estate, a massive property portfolio that includes much of Regent Street in London. However, the Crown Estate “belongs to the reigning monarch,” but isn’t their private property, and they get only a share of the revenue it generates.
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