The veil of secrecy that surrounds the royal finances was nudged aside a little on Thursday to allow the release of a new piece of information. We learned for the first time how much the king’s annual tax bill comes to.
This was not a full tax return. It was a two-sentence declaration, stating his tax payable amounted to £12.9m in 2024-25, and a slightly smaller sum the year before. His total tax payable since accession comes to £30m.
It has been a long time coming. Unlike other citizens, the monarch is not liable for tax, but the king and his mother before him started paying it voluntarily in 1993.
The declaration was short on detail. We don’t know what his total income was for those years. We don’t know the total value of his private fortune. And we have no idea how much his tax bill was reduced by for expenses such as those incurred performing royal duties.
The small nugget of new information has brought to light one startling fact though. The king’s tax bill is low, even when compared with those who have smaller fortunes.
Thanks to painstaking investigations by the Guardian, in its 2023 cost of the crown series, the king’s private wealth, known as the privy purse, is estimated to be at least £1.8bn. This includes the Duchy of Lancaster estate – a £690m land and property portfolio handed from one monarch to the next and which provides him with income of £25m a year; and an even larger pile of other assets, such as cars, jewels, art and the private residences of Balmoral and Sandringham. We have very little idea how much the king holds in financial investments, or what the revenues from these are.
The tax the king pays covers all of the privy purse, all £1.8bn or more of assets.
Because we don’t know the total income, we are not able to check what the king’s effective tax rate is, but comparisons with other taxpayers raise questions.
A scan of this year’s Sunday Times tax list shows that the hedge fund boss Suneil Setiya, also estimated to be worth £1.8bn, paid £114m in annual tax. This is 10 times the sum the king paid in 2023-24.
The musician Ed Sheeran, whose fortune at £410m is a fraction of the king’s, paid £20m to HMRC. The author JK Rowling, worth an estimated £975m, was billed £47m on her earnings and gains.
Even the Manchester City footballer Erling Haaland, who is Norwegian, pays more than the king – his most recent tax bill was £17m.
Without more information about the size and shape of the privy purse, it is impossible to say why the king’s bill is so low.
What we do know is that the Duchy of Lancaster is not liable for the kinds of taxes that might be paid by a company or a trust. The capital gains made by buying and selling property, and the rents received from tenants, can all accumulate and be reinvested tax free, allowing the king’s wealth to grow more quickly than that of his subjects.
The privy purse could be described as operating like a mini-tax haven. The assets held by the duchy are untaxed, while the king’s other holdings are undeclared. The palace says the king voluntarily pays capital gains on his privately held wealth, and that the accounts are externally audited each year. They say this part of his personal holdings remains private, as for any other citizen. But no other citizen has such discretion over the tax they choose to pay.
The palace was approached for comment.
