Under a clause agreed in 1993 by the then prime minister, John Major, any inheritance passed “sovereign to sovereign” avoids the 40% levy that applies to assets worth more than £325,000. The Crown Estate is estimated to have assets of £15.2 billion, of which 25% of profits are given to the royal family as a government grant. The estate includes the royal archives and the royal collection of paintings, held by the monarch ‘in right of the crown’. These assets cannot be sold by the King and are actually handed over to the government in return for a grant. The government’s guidance concludes that it would be “inappropriate to pay inheritance tax on such assets”. Separately, Charles also inherits from the Queen the Duchy of Lancaster, a private estate that includes a portfolio of lands, property and assets held in trust for the sovereign. He is exempt from inheritance tax on these assets, among other things, in order to maintain “a degree of financial independence from the government of the day”. Government guidance adds: “The monarchy as an institution needs sufficient private resources to enable it to continue to fulfill its traditional role in national life.” The 1993 clause agreed by Major also exempts inheritance passed from the wife of a former sovereign to a sovereign. It was last used on the Queen Mother’s death in 2002, when she left her estimated £70m fortune, including a collection of Fabergé eggs, to the Queen, her only surviving daughter. Anyone other than King Charles who inherits private assets from the Queen will have to pay inheritance tax. The guidance states: “In relation to assets which can normally be regarded as private, the arrangements provide that inheritance tax will not be payable on bequest gifts from one sovereign to another, but will be payable on gifts and bequests to anyone else. “ In addition, the monarch is not legally subject to income tax, capital gains tax or inheritance tax. There was public pressure on the cost of the monarchy in the early 1990s, however, and questions were raised about who would foot the bill for repairing Windsor Castle after it was badly damaged by fire. Archie Bland and Nimo Omer take you to the top stories and what they mean, free every weekday morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. In 1992 an announcement was made that the Queen would voluntarily pay income tax the following year and Charles declared when he was Prince of Wales that he would emulate his mother. The Duchy of Lancaster estate, the Queen’s main source of wealth, had an income of almost £22 million in 2021.
