How the Queen and Prince Charles came to pay income tax

Back in June 1991, a programme I had made for Granada TV’s current affairs series, World in Action, entitled ‘The Firm’, was broadcast revealing much about the Royal Family’s wealth and tax arrangements. I had worked closely with Phillip Hall, whose book on the subject, ‘Royal Fortune’ was published the next year. Phil had spent a decade investigating the Queen’s wealth. At the time, the Queen and Prince of Wales were not paying income tax.  For most members of the public, who concerned themselves with such matters thought that not being required to pay tax was privilege of the Royals throughout history.. The most significant strand of the programme’s research was to show that there was no historical basis for the tax exemption and that tax had been paid by all the Queen’s predecessors except her father, George VI (d 1952) who had been the first monarch to have negotiated an exemption for income tax. (Modern income tax is generally accepted to have been first implemented in 1799).

Before 1760 the monarch met all official expenses from hereditary revenues, which included the profits of the Crown Estate (the royal property portfolio). King George III agreed to surrender the hereditary revenues of the Crown in return for payments called the Civil List. Our research showed that members of the royal family had subsequently negotiated a series of favourable tax and financial arrangements over the years. The number of members of the family paid out of the public funds to the Civil List had grown over the years.

We had also a considered attempt at estimating the Queen’s wealth – which is veiled in secrecy – and put her as one of the wealthiest women in the world worth £7.7bn. Her assets were and are enormous, though it fair to say, much is held on behalf of the nation like her astonishing collection of art including Michaelangelo drawings. some is purely commercial. Prince Charles has turned the massive land ownings of the Duchy of Cornwall into a lucrative business for the family.

I also wrote an article of the Sunday Independent ‘Secret Deals let Queen avoid her income tax’. (see attached pdf)

Directed by Brian Blake, the programme had a massive impact at the time including a Private Eye cover. It is probably the most impactful piece of journalism of my career with a direct cause and effect. It hit a public nerve.

As I recall the Royals were not very popular the time and later in 1991, as a result of a backlash, and the Queen urged Prince Charles to start discussions with the Treasury. The Queen herself was already consulting her advisers and the Treasury about her tax status.

In Autumn 1992 with the financial discussions still going on behind closed doors, the public were also concerned that the Queen wanted public funds to repair Windsor Castle which suffered a devastating fire in Autumn 1992. The Daily Mail, unaware of the behind-the-scenes negotiations, gently proposed a public gesture. “We sympathise with The Queen. Of course, we do. But these are hard times for most people. Many of them have a truly horrid year. They have lost their livelihoods….Even been driven from their homes. The Queen should pay some tax on her income. And fewer member of her family should be a charge on the Civil List. She should offer to contribute to restoring the fabric of Windsor Castle.’ At the time, a poll carried out by Numbers Market Research for The Independent on Sunday found that nearly eight out of 10 people believed the Queen should pay tax.

Six days after the Windsor Castle fire, the then PM John Major made a surprise announcement in the House of Commons that the Queen and the Prince of Wales had volunteered to pay tax on their private incomes and that the Queen would reimburse the Civil List annuities of five lesser members of the Royal Family. John Major informed Parliament that the National Audit Office would be looking into expenditure on the royal palaces.

1992 was dubbed the Queen’s ‘annus horribilis’ We estimated the Queen’s income tax liability to be £7.2m per annum. Ever since the Queen and Prince Charles has paid income tax on the private income and there are less members of the Royal Family on the Civil List.

The question of the Royal Family’s wealth and the delicate relationship between the Civil List – payments to the Royal Family, what they are personally worth and how much personal wealth they derive from the land they hold and what exactly do they hold on behalf of the Nation, are still percolating. I expect to see new revelations before long.