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The Monarchy compares most favourably with costs of Heads of State elsewhere.
There are many misunderstandings about the cost of the Monarchy, many of them perpetuated by republicans and journalists who deliberately give inaccurate information.
The official website of the British Monarchy contains extensive information about the royal finances.
How is the work of The Queen funded? How much does the Royal Family cost the tax payer each year? Does The Queen pay tax - and if not, why not?
The Monarchy has sometimes been described as an expensive institution, with Royal finances shrouded in confusion and secrecy. In reality, the Royal Household is committed to ensuring that public money is spent as wisely and efficiently as possible, and to making Royal Finances as transparent and comprehensible as possible.
Each year the Royal Household publishes a summary of Head of State expenditure, together with a full report on Royal public finances. These reports can be downloaded from the royal website.
Head of State expenditure is the official expenditure relating to The Queen's duties as Head of State and Head of the Commonwealth.
Head of State expenditure has reduced significantly over the past twenty years or so, from £87.3 million in 1991-92 (expressed in current pounds) to £41.5 million in 2008-09 to £35.7 million in 2014-2015.
Head of State expenditure is met from public funds in exchange for the surrender by The Queen of the revenue from the Crown Estate.
Head of State expenditure excludes the costs of Police and Army security and of Armed Services ceremonial, as figures are not available.
Up until 31 March 2012, the Civil List was the amount of money provided by the Government to meet the official expenses of The Queen's Household, so that The Queen could carry out her role as Head of State and Head of the Commonwealth.
The Queen and The Duke of Edinburgh were - and remain still - the only members of the Royal Family to receive an annual parliamentary allowance.
In 1760, George III reached an agreement with the Government over the Crown Estate. The Crown Lands would be managed on behalf of the Government and the surplus revenue would go to the Treasury. In return, the King would receive a fixed annual payment, which until 31 March 2012 was called the Civil List.
About 70 per cent of the Civil List expenditure went on staff salaries. It also contributed towards meeting the costs of official functions such as garden parties, receptions and official entertainment during State Visits. The Queen entertains almost 50,000 people each year. The Royal Household strives to be open and transparent, and details of expenditure are published in an Annual Summary and Annual Report.
On 2 July 2012 the final report by the Royal Trustees on Civil List expenditure and funding was released. From 1 April 2012 the funding provided under the Civil List arrangements was consolidated within the Sovereign Grant.
The Sovereign Grant Act 2011 consolidated the funding provided to support the official duties of The Queen and maintain the Occupied Royal Palaces which had been provided under the Civil List and the Grants-in-aid for the Maintenance of the Occupied Royal Palaces, Royal Travel and Communications and Information.
The Sovereign Grant is calculated based on 15% of the income account net surplus of the Crown Estate for the financial year two years previous.
Financial Summaries of the Sovereign Grant can be found at: The Official Website of the British Monarchy - Royal Household Financial Reports
The money goes towards a number of resources which enable Her Majesty to carry out her official duties. These include: Royal travel for official engagements in the UK and overseas; the maintenance of Royal residences which are used for formal entertaining and ceremonial events; funding for the work of The Duke of Edinburgh which supports and complements that of The Queen and salaries for employees of the Royal Household who support and administrate the work of Her Majesty as Head of State.
Since 1993, The Queen has repaid the annual parliamentary allowances received by other members of the Royal Family. Most of the allowances received are spent on staff who support their public engagements and correspondence.
The Prince of Wales's life and work are funded predominantly by the Duchy of Cornwall.
In 2000, the annual amounts payable to members of the Royal Family (which are set every ten years), were reset at their 1990 levels for the next ten years. Apart from an increase of £45,000 on the occasion of the Earl of Wessex’s marriage, amounts remain as follows, provided by The Queen:
The Duke of York (£249,000 per annum)
The Earl of Wessex (£141,000 per annum)
The Princess Royal (£228,000 per annum)
The Duke and Duchess of Gloucester (£175,000 per annum)
The Duke and Duchess of Kent (£236,000 per annum)
Princess Alexandra (£225,000 per annum).
The Queen pays tax. In 1992, The Queen volunteered to pay income tax and capital gains tax, and since 1993 her personal income has been taxable as for any other taxpayer. The Queen has always been subject to Value Added Tax and pays local rates on a voluntary basis.
Of The Queen's sources of funding - the Sovereign Grant, the Privy Purse (which includes income from the Duchy of Lancaster) and private income - the Sovereign Grant, which covers official expenditure, is not taxed. The Privy Purse is largely used to meet official expenditure incurred by Her Majesty and other members of the Royal Family which is not met by the Sovereign Grant; it is taxed to the extent that the income is not used for official purposes. The Queen pays tax on her personal income and capital gains. Accounts for the Duchy of Lancaster are presented to both Houses of Parliament annually, copies of which are available online at www.duchyoflancaster.co.uk.
The £132.9 million profit of the Crown Estate for the year ending March 31st, 2000 was paid to the Exchequer for the benefit of taxpayers. This sum far exceeds the total cost of the monarchy. The Queen's Civil List has been fixed at £9.7 million per annum until 2011. Full details of royal household expenditure are published. A summary of these follows. The annual cost of the monarchy is approximately £37 million.
Prince Philip is the only member of the royal family to receive an annuity from the Civil List of £359,000. The annuities of other members of the Royal Family who carry out engagements are provided by the Queen from the Privy Purse. The Revenue for this is obtained from the Duchy of Lancaster, an independent possession of the Sovereign since 1399. It is not included in the National Asset Register of government holdings published by the Treasury. The Prince of Wales derives his income on which he pays tax. The occupied royal palaces- principally Buckingham Palace, St. James's Palace, Clarence House, parts of Kensington Palace and Windsor Castle - are funded by grant-in-aid. Obviously they would be maintained by the state whether Britain were a monarchy or not. The unoccupied palaces such as the Tower of London and Hampton Court Palace are maintained from visitor admissions.
Royal transport, required to enable the royal family to carry out almost 3,000 engagements year is also funded by grant-in-aid. Of course official travel would have to be paid for if Britain were a republic.
Privately the Queen owns Balmoral and Sandringham and some smaller properties. Estimates of the Queen's wealth often mistakenly includes items which are held by the Queen as sovereign. These include the royal palaces and art collections. It is interesting to note that far from being Britain's wealthiest person the Queen is 105th on the Sunday Times 2001 Rich List!
In republics not only do presidents have to be supported financially, as do former presidents and widows, but their official duties have to be paid for and official and historic residences maintained. And there is the added expense of periodic elections. Republics show great reluctance in publishing the cost of the heads of state but the cost of the British monarchy compares extremely favourably.
Administration of honours
This expenditure is to meet the cost of the Central Chancery of the Orders of Knighthood. It is responsible for administering and maintaining the records of the Orders of Chivalry, for organising the investitures at which the honours are presented by The Queen and for the distribution of the insignia.
Equerries and orderlies
Equerries and orderlies are seconded from the Armed Services to assist The Queen and other Members of the Royal Family in undertaking their official duties. Baggage transport is also charged to this heading.
Maintenance of the Palace of Holyroodhouse
The Palace of Holyroodhouse is The Queen’s official residence in Scotland. Members of the Royal Family stay there for several weeks during the year, while undertaking official duties. The Palace is also open to the public with 232,000 paying visitors in 2002-03. The Queen opened the new Queen’s Gallery on 30th November 2002 which attracted 28,000 paying visitors in 2002-03.
• Figures not audited
State Visits to and by The Queen and liaison with the Diplomatic Corps
During 2002-03 The Queen made a Royal Visit to Canada. In 2001-02 there were two outward State/Royal Visits and two inward State Visits. The Marshal of the Diplomatic Corps is responsible for liaison with the Diplomatic Corps in London. An annual reception for the Diplomatic Corps is held at Buckingham Palace or Windsor Castle.
The costs are to provide stands, barriers, flags, daises and canopies for State Visits and other ceremonial occasions. The decrease in expenditure reflects the fact that there were no inward State Visits in 2002-03 and two in 2001-02.
Maintenance of the Home Park at Windsor Castle
The Crown Estate is responsible for the maintenance of the Home Park at Windsor Castle and for its day-today security. The Home Park provides accommodation and sports grounds for staff. Part of it is farmed with rent payable by the Privy Purse to the Crown Estate.
Costs Funded From Other Sources
Duchy of Lancaster
Income from the Duchy of Lancaster, which is subject to tax in the normal way, funds the Privy Purse. It is The Queen’s private income although largely used by Her Majesty to meet official expenditure, in particular reimbursing Parliamentary Annuities and meeting expenses of other Members of the Royal Family. The Privy Purse also pays for the upkeep of Balmoral, The Queen’s estate in Scotland. Accounts for the Duchy of Lancaster are published and laid before Parliament annually, copies of which are available online at www.duchyoflancaster.co.uk.
Duchy of Cornwall
Income from the Duchy of Cornwall, which is also subject to tax in the normal way, funds the official duties of The Prince of Wales. Accounts for the Duchy of Cornwall are published and laid before Parliament annually, copies of which are available online at www.duchyofcornwall.org.
The Royal Collection
The Royal Collection consists of works of art of all kinds and is held by The Queen as Sovereign in trust for her successors and for the nation. All costs, except for some building occupancy costs, are met by the Royal Collection Trust from visitor admissions to the occupied palaces and from related activities. Five million people saw the Royal Collection in royal palaces during 2002-03. In addition over 1,300 items were loaned to special exhibitions or formed part of the Royal Collection’s own travelling exhibitions. During 2002-03 £872,000 was spent on conserving items from the Collection and £2.1 million on new galleries, in which works of art from the Collection are displayed to the public. The Royal Collection receives no funding from the Government or the National Lottery.
An annual report is published by the Royal Collection Trust, copies of which are available online at www.royalcollection.org.uk.
For further information on Royal finances, visit www.royal.gov.uk