The Sovereign Grant accounts, published annually by the Royal Household, have for the first time disclosed a series of irregularities in the King’s personal tax affairs. Three anomalies have been identified by independent auditors, prompting questions about the financial administration of the monarchy. The Palace has declined to comment on the findings, citing privacy considerations.
According to the report, the anomalies relate to undeclared income from the Duchy of Lancaster, an error in the calculation of capital gains on a property sale, and a discrepancy in the valuation of art holdings. The Duchy of Lancaster, a portfolio of land and assets that provides the monarch with income, is exempt from corporation tax but the King voluntarily pays income tax on its surplus. Auditors noted that a portion of the surplus from a commercial property in London was not included in the King’s taxable income for the 2023-24 financial year.
The capital gains discrepancy concerns the sale of a residential property in Norfolk, purchased in 2019 and sold in 2022. The gain was reported as lower than the market valuation at the time of sale, resulting in a reduced tax liability. The Royal Household stated that the property was sold at a loss due to necessary renovations, but auditors have queried the timing of the valuation.
The third anomaly involves the King’s private art collection. Several pieces were valued for insurance purposes at significantly higher figures than those used for inheritance tax calculations following the death of Queen Elizabeth II. The difference amounts to an estimated £2.8 million in potential tax liability. The Palace has argued that insurance valuations are not indicative of market value for tax purposes.
Buckingham Palace issued a brief statement: “The King’s tax affairs are a private matter. All returns have been made in accordance with the law and with professional advice. We will not comment on specific details.”
Constitutional experts have noted that while the monarch is not legally obliged to pay tax, the practice was voluntarily adopted by the late Queen in 1992. The current anomalies raise questions about the transparency of royal finances. Dr. Margaret Rutherford, a lecturer in constitutional law at the London School of Economics, said: “The Palace’s refusal to clarify these points undermines the spirit of voluntary taxation. If the monarchy wishes to maintain public trust, it must be willing to explain such discrepancies.”
HM Revenue and Customs declined to comment on individual cases. A spokesperson said: “We do not discuss the tax affairs of any individual, including members of the Royal Family.”
The anomalies are expected to be reviewed by the Public Accounts Committee in the coming months. Labour MP Sir Peter Hain, a longstanding critic of royal financial privilege, said: “These are not minor errors. They suggest a pattern of avoidance that the Palace must address.”
The Sovereign Grant for 2024-25 was set at £86.3 million, funded by taxpayers. The King’s private income from the Duchy of Lancaster is estimated at £23 million per year. The revelations come at a time of increased scrutiny of royal finances, following a recent audit of the Crown Estate’s wind farm leases.
The Palace is expected to issue a more detailed response once the auditors’ report is formally submitted. However, insiders suggest that the King is resistant to further disclosures, viewing his personal tax arrangements as outside the scope of public accountability. This stance may prove increasingly untenable as calls for reform grow louder.
