Every year the estates of the royal family make tens of millions of pounds, yet they pay no corporation tax.
Last year the Duchy of Lancaster raised £27.4 million for the King and the Duchy of Cornwall raised £23.6 million for Prince William.
This is separate from the sovereign grant of tens of millions of pounds – funded by the taxpayer – which pays for formal royal duties, palaces and official households.
The duchies – worth £1.8 billion – are the personal property of King Charles and Prince William, but they are exempt from corporation tax and capital gains tax.
In 2013 a parliamentary committee called for a government inquiry into whether this special tax status gives the King and Williams’ businesses unfair competitive advantage over their rivals.
As well as being unfair and old fashioned, this arrangement is increasingly costing the Treasury millions of pounds a year in lost revenue – money desperately needed by our struggling public services.
Where’s the money coming from?
The royals are costing the public more than just lost tax revenue, however.
An investigation by Channel 4’s Dispatches and The Sunday Times revealed last month that the duchies are making money from charging the NHS, schools and charities for using their land.
One deal will see the NHS pay the Duchy of Lancaster £11.4m over 15 years for a warehouse to store ambulances in.
The Ministry of Justice is paying the Duchy of Cornwall £37m to lease Dartmoor prison for 25 years.
The Army pays the Duchy of Cornwall to train on Dartmoor and the Navy pays to moor and refuel its fleet.
The King will also make £28 million from windfarms and the Duchy of Lancaster has a feudal right to charge for cables crossing the foreshore.
A 14th century relic
This special tax status is the result of the royal family being exempted from hundreds of British laws.
“The current arrangements stem from the 14th century”, a report by Parliament’s Public Accounts Committee concluded in 2005.
“The resulting income is to that extent an accident of history.”
The parliamentary report recommended the royals be stripped of their power to control the duchies.
Wealth unchecked
The King has a personal fortune of £610 million. Meanwhile, incomes from the royal duchies have increased fivefold since the early 1990s.
The King and Prince of Wales’ businesses are exempt from corporation tax. They’re also exempt from Capital Gains Tax and Inheritance Tax. We have called this out in the press before.
The King and the prince both pay income tax voluntarily, but they are not legally obliged to, despite being among the wealthiest people in the country.
This situation is unfair, costing the country millions in lost revenue. It must not continue.
At a time when NHS waiting lists are surging and other public services need extra resources, it’s not right that the royal duchies have special tax statuses.
Our tax system is also littered with other loopholes – benefiting the rich and costing billions in potential tax revenue. These must also close.
We would support a new Parliamentary investigation into the royal finances and tax arrangements.
We support calls for the duchies to be folded into the Crown Estate, which sends its profits to the Treasury. And at the very least for the duchies to pay corporation tax.
The royal family should also pay inheritance tax.