May is the month when household and business accounts look like a bare cupboard after the April tax deadline. To a degree the Prince of Wales knows the feeling: he is now reported to have paid up to £7m in levies on 2023-24, the first financial year in which he oversaw the lucrative Duchy of Cornwall. Along with the Duchy of Lancaster, this is the entity which largely funds his lifestyle, travel and the upkeep of landed property.
The terms of all this however are shrouded in accounting fog. Royals and taxation have been a fraught area ever since William’s forebears from the 15th to the 17th century extracted “benevolences” or “loving contributions” as a way of raising the Crown’s tax takes. The modern monarch deploys deals brokered by governments with the Treasury to secure its income. And these are very favourable. Under a deal between Queen Elizabeth II and the Treasury in 2011, the monarch is not legally liable to pay income tax, capital tax gains or inheritance tax and neither is William legally liable for income tax from the duchy.
This means the royals do not pay mandatory tax as the rest of us do. King Charles and William do in fact now agree to pay tax – but that is not the same as being required to do. Payments to support official duties are deductible, though there is scant clear accountability about what is included. The fact that the royals are starting to allow some insight into the voluntary taxes they pay is however a sign that this is recognised as a vulnerability.
At the end of last year, William told Eugene Levy, the Canadian actor who plays the fallen financial patriarch in Schitt’s Creek, of his plans to modernise the monarchy, adding pointedly “change is on my agenda – I don’t fear it”.
While this was a “Canada first” encounter to remind the remaining North American country with a British royal as head of state that it is relevant, the message of reform is real. That will open up a Pandora’s box of probing about the way the duchies of Cornwall and Lancaster operate – and their tax status. These are landed estates which provide income for the King and Prince of Wales, and they are also diversified businesses. They own vast amounts of land and property, rented at market rates to organisations ranging from the NHS to the Armed Forces and prisons, as well as investing in shipping, mining and mineral rights.
Some of these undertakings invite awkward questions as to the balance of the public service values which the duchies officially vaunt – and flat-out profit-seeking. Embarrassed by reports of collecting rents from Scouts organisations and NHS facilities, the Duchy of Cornwall last year announced it would waive or reduce rents for properties used by for community groups. But again, the terms and extent of the re-think are unclear.
How William handles this as part of his agenda for the future will be telling. The shock of his uncle’s ejection from the family fold and Windsor Royal Lodge was, according to a friend, “a massive jolt” for the heir to the throne. The trailing wires of that saga and curdling embarrassment about how long the former duke of York was indulged in his tawdry lifestyle, effectively from the proceeds of royal bank accounts and the public purse, have led to the family icily referring to him as merely “AMW” – Andrew Mountbatten-Windsor.
The lesson of that saga and the funding of a settlement by the Royal Family to the late Virginia Giuffre in return for an end to a civil suit against Andrew (who denies all wrongdoing connected to his friendship with Jeffrey Epstein and allegations of misconduct) has been a warning sign to William that opacity is a risk factor for the royals.
Closer to him personally is the bang-for-buck calculation about working hours. One of the hitches with funding royal expenditure from the duchies is that it raised the question of how accountable the royals are for the amount of time they work – or don’t – and the crossover between public duties and their luxurious living conditions.
William is essentially the “next gen” royal on whose mid-life shoulders an awful lot rests. Critics carp that he takes long holidays and has signed up for a relatively slender schedule of travel and visits this year. He is however a steely character who knows his own mind – and his mind is that with three young children and a wife recovering from cancer, he should sequence his responsibilities.
This seems sensible to me. The royals have fallen short most when family life was neglected or too unforgivingly in the spotlight – the conditions in which William and Harry grew up. If we want William to be a dad-royal then he should be allowed family time, in the knowledge that he and the Princess of Wales will take up the slack on gruelling overseas schedules in the coming years, as his father and Queen Camilla head towards 80.
That does not mean wider changes cannot be made as the finances of the “firm” move into the spotlight. In essence, the duchies argue they have a “commercial imperative” and balance it with social and green projects. Such is the common stance of major corporations: profit maximisation, offset by social, green or other worthy initiatives on the other.
The more royal funding entities behave like big businesses however, the more their tax breaks should similarly come under scrutiny. As a former head of the Public Accounts Committee, Dame Margaret Hodge, has pointed out of the duchies’ leeway, “They don’t pay capital gains tax and they don’t pay corporation tax, yet they claim to act commercially. But they can’t have it both ways.”
In fact, they do, on an exceptional basis which is poorly explained. William’s personal tax bill opens the door to many more searching questions about how his quest for more transparency and modernisation will sit alongside an obscure funding arrangement. If the heir to the throne “doesn’t fear change” as he plans for an updating of the Crown to secure its future, that’s just as well. Because the questions that follow the money won’t go away.
Anne McElvoy is co-host of Politics at Sam and Anne’s and executive editor at Politico