How the British Royal Family Earns Their Income

The 17th century was a tumultuous one for the British royals. It all started well enough with the unification of the English and Scottish crowns and the ascension of James VI of Scotland to become James I of Great Britain. However, debt and deficit led to significant tensions between James and the British parliament, something which only got worse during his son's (Charles I) reign. This resulted in the "Eleven Years Tyranny" when Charles governed without parliamentary rule due to lack of funds, eventually leading to the English Civil War (1642-1651) and a severe reassessment of how the crown earned its income.

Until 1760, the royal family earned their income from hereditary revenues which were distributed by themselves without parliamentary interference. However, after misspending, battles for power and inherited debt, the crown could not keep up with payments and the royal finances were in complete disarray. This is why when George III ascended the throne, he had to transfer the control of money to parliament who were able to use it to pay government expenses as well as provide for the crown. The Civil List did change over the course of its 251 year run, usually reducing the amount the Crown would be paid percentage wise, but still taking care of all household expenses, upkeep of estates and payments of royal employees and pensions.

The Civil List was abolished in 2011, but it's difficult to say if it really changed anything significantly. The main outcome was that it consolidated the four main funding sources for the crown, these being: the Civil List and grants for Royal Travel, Maintenance for Royal Palaces and the vaguely titled Communication and Information. In its place was instituted the Sovereign Grant which turned all of these into a lump sum.

The money comes from profits of the Crown Estate, 15% of which is used for the grant. However, the money which is paid to the Crown cannot be less than the previous year, so this percentage can be more if this were to happen. Any excess is put into a reserve which also has a cap on it, so it appears to have more accountability than the Civil List. In this way it is treated more like other government funding bodies. It pays for lawns being mowed, bedposts being polished and general upkeep.

Did you know that the Queen is a Duke? Since 1399 the British monarch has received the Duchy of Lancaster which provides a private income from the portfolio of land (some 18,433 hectares), properties and other assets which are there for the sovereign's use. It is also for the use of subsequent sovereigns, so the Crown is not able to keep and control the capital. After the end of the financial year in 2015, the estimated value of the duchy was £472 million, but the Queen receives only the net profits which are a fraction of this.

It is run and administrated by the government and there is debate over whether or not it should be considered public money since the profits are given to the Crown to do as they wish. However, it also pays for civil servants, diplomats and more, so it is a vital source of revenue to public institutions. The Privy Purse is mostly made up of the Duchy of Lancaster, but does include other revenue streams. It is used to pay for what is not covered by the Sovereign Grant, much of which seems to be used for expenses of other members of the royal family.

The following question must therefore be asked: what does the Queen do with all of her money? As the money is hers, she has the right to invest it however she pleases (within moral reason). She has a personal investment portfolio and receives income from her private estates including Sandringham and Balmoral Castle. These estates were inherited by the Queen which is why they are in her private portfolio. Some of this revenue includes admission prices for visitors, so when you go for a nice day out in the country, the money goes to the upkeep of the properties, but the profits will also go to the owner.

What she invests in is up to her, but as it is a private revenue, there is a certain amount of secrecy over how much she actually earns. She willingly pays income tax on the profits of the Duchy of Lancaster, but we do not know how much. She has paid tax on her private income since 1993, but we don't know how much this is either. It is only an assumption, but if she is willing to pay the tax voluntarily, it might be deducted that she can afford it. We do know that there is a difference between the monarch's private income and the Crown Estate. The latter includes revenues from investments which go back into itself, rather than the amount allotted to the queen from the Sovereign Grant. The Crown Estate owns everything from the Crown Jewels to shopping centers and unmarked mute swans in open water.

Prince Charles earns his revenue in a similar way as the Duchy of Lancaster affords money to the reigning monarch. It is made up of property holdings and an investment portfolio. As it goes to the heir apparent, it is exempted from corporation tax, but Charles does voluntarily pay income tax on it like his mother. He also has his own private income which has come under scrutiny in recent years thanks to dealings with foreign governments such as Saudi Arabia which have possible links to arms deals with British armament manufacturer BAE Systems.

Apart from the money distributed by the Queen from the Duchy of Lancaster, the rest of the Royal Family earn their money from careers. They do not have tax exemption like the Queen and Prince Charles, but they certainly do have the added benefit of a wealthy lineage to use as capital. This also has led to scrutiny in the British press over the legitimacy of some of this income and whether or not royal prestige has been used for the right reasons. Royals such as Prince Andrew have long had concerns with their overseas influence as his position as an ambassador for British business overseas has got him in choppy water thanks to his associations with corrupt investors and even a sex abuse scandal.

Many like Prince Harry and Prince William have or have had military careers. William is a flight lieutenant and helicopter pilot while Harry is a captain. They both have inheritance from their deceased mother, Diana Princess of Wales, which garners them a tidy £450,000 per annum interest on the original £10 million inheritance. William and his wife Kate get reimbursed for expenses incurred on their royal duties (public events, etc.), but do not get a salary.

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