Finances of the Monarchy

How is the monarchy funded?

The Sovereign Grant Act 2011 changed the way in which the Monarchy is funded. The Act removed two existing sources of funding for the Queen – the Civil List and grants-in-aid from Government departments – and replaced them with a single ‘Sovereign Grant’. This arrangement has been in place since 1 April 2012.

The Queen currently receives three kinds of income:

The Sovereign Grant is used to meet official expenditure. To date, the Grant has been set at 15% of the profits of the Crown Estate, although this will rise to 25% next year. The rest of the Crown Estate’s profits go the the Treasury. The Sovereign Grant was £42.8m in 2016-17, of which £41.9m was used to meet official expenditure and £0.9m was transferred to the Sovereign Grant Reserve.

The Privy Purse is the private income to which the Queen is entitled as Sovereign, and comes from the net revenue of the Duchy of Lancaster (£19.1m in 2016-17). The Duchy is a landed estate in England and Wales held in trust for the Sovereign since 1399. The Privy Purse is taxable to the extent that it is used for private purposes, but is also used to meet some official expenditure.

Her personal income, derived from her investment portfolio as an individual. As with any other individual, information about the Queen’s private funds is not made public. Estimates of the Queen’s personal wealth vary and sometimes include items held by the Sovereign ‘on behalf of the nation’ and which therefore cannot be sold (e.g. the Crown Jewels and official Royal residences).

The flowchart below summarises how this income was used in 2016-17 (click to enlarge):

Previous arrangements

Prior to the Sovereign Grant Act 2011, official expenditure was met using an annual Civil List payment and grants-in-aid provided by government departments for specific purposes. Direct payments from the government and Crown Estate were also used to meet official costs, although this type of expenditure declined over the last twenty years of the old system.

More detail on the previous system is available in a Library research paper published when the Sovereign Grant Bill was in progress (RP11-57). The National Audit Office (NAO) also published a report on the Sovereign Grant in 2013.

The Prince of Wales

The Prince of Wales’ official costs are primarily met from his income from the Duchy of Cornwall, an estate consisting primarily of agricultural land across England. The Prince of Wales is entitled to the net revenue of the Duchy, but currently pays income tax at the top rate.

In 2016-17, the Prince of Wales received £20.7m from the Duchy of Cornwall (before tax). He also received £1.8m in payments from government departments and the Sovereign Grant in order to meet official expenditure. Overall expenditure (including tax and personal expenditure) was £22.3m, leaving a net surplus of £0.2m.