King Charles will not pay tax on the Queen’s inheritance | King Charles III

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King Charles will not pay tax on the fortune he inherited from the late Queen, although he has volunteered to follow his mother’s example in paying income tax.

Under a clause agreed in 1993 by then-Prime Minister John Major, any inheritance passed “sovereign to sovereign” avoids the 40% levy applied to assets valued at more than £325,000.

The crown domain has an estimated asset of £15.2 billion, with 25% of the profits going to the Royal Family as a Sovereign Grant. The estate includes the Royal Archives and the Royal Collection of Paintings, which are held by the Monarch “from the Head of the Crown”.

These assets cannot be sold by the King and are in fact transferred to the government in exchange for a subsidy. The government’s guidelines conclude that it would therefore be “inappropriate for inheritance tax to be paid on such assets”.

Separately, Charles also inherits from the Queen the Duchy of Lancaster, a private estate which includes a portfolio of land, property and assets held in trust for the sovereign.

He is exempt from inheritance tax on these assets, among other things, in order to preserve “a certain financial independence from the government of the day”.

The government guidelines add: “The monarchy as an institution needs sufficient private resources to enable it to continue to play its traditional role in national life.”

The 1993 clause agreed by Major also exempts past inheritance from a former sovereign’s spouse to a sovereign. It was last used when the Queen Mother died in 2002, when she left her estimated £70million fortune, including a collection of Fabergé eggs, to the Queen, her only daughter survivor.

Anyone other than King Charles inheriting the Queen’s private estate will have to pay inheritance tax. The guidelines state: “In respect of assets which may properly be regarded as private, the provisions provide that inheritance tax shall not be paid on gifts of bequests from one sovereign to another, but will be due on donations and legacies to someone else. ”

The monarch is furthermore not legally liable to pay income tax, capital gains tax or inheritance tax. However, there was public pressure over the cost of the monarchy in the early 1990s, and questions were raised about who would foot the bill for repairing Windsor Castle after it was badly damaged by a fire.

An announcement was made in 1992 that the Queen would voluntarily pay income tax the following year, and Charles said when he was Prince of Wales that he would follow in his mother’s footsteps.

The Duchy of Lancaster estate, the Queen’s main source of wealth, made nearly £22million in revenue in 2021.

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