How does the royal family make money?

24 May 2018
What was claimed

The royal family brings in £400m a year in private revenue, of which £360m is kept by government under the Sovereign Act 2011.

Our verdict

Incorrect. The Crown Estate brought in £330 million in 2017/18, this money goes to the government who then give the Queen a grant based on 25% of the Crown Estate’s income two years previously.But the Crown Estate isn’t the royal family’s private property. The Queen pays tax to government on her other private incomes.

What was claimed

The Queen takes 15% of the crown estate profit each year - around £60m.

Our verdict

Historically the Queen received a grant from the government based on 15% of the income from the Crown Estate, but this has gone up to 25% to pay for refurbishments to Buckingham Palace. In 2019/20 this will equate to about £82 million.

“Family brings in 400 million a year in private revenue that under the “sovereign act 2011” the government keeps £360 million of.”

Facebook user, 19 May 2018

“Family brings in £1.8 b per year in tourism.”

Twitter user, 18 May 2018

“The Queen takes 15% of the crown estates profit each year. Around £60million.”

Viral post sent to us by a reader.

Following the wedding of Prince Harry to Meghan Markle, we’ve been asked to factcheck claims going round on social media about the royal family’s finances and contributions to the British economy.

This follows claims that the wedding would be taxpayer funded—something we looked at in this factcheck.

The royal finances are complex and reflect the way the monarchy’s role has changed over time. Currently the Queen’s income comes from three sources: the Sovereign Grant from the government and two private income sources. One of these she receives as sovereign and is passed down from sovereign to sovereign (the Privy Purse), and the other is income from her personal investments. 

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Some of the Queen’s money comes from the Sovereign Grant

Historically, the Sovereign was responsible for lots of government expenses and used income from their lands to help pay for this.

As public taxes became more important than Crown lands income as the government’s primary source of revenue, King George III agreed to give the income from some Crown holdings to the Treasury in exchange for an annual payment.

These holdings are collectively known as the Crown Estate. The estate includes lots of properties which generate income from things like rent. 

Over time, more and more income from Crown lands was handed over to government, and as such the Sovereign was directly responsible for less and less government expense.

The profits of the Crown Estate are public money and all go to the Treasury. This is then collected together with the income the Treasury gets from general taxation and other sources, into one pot: the “Consolidated Fund”. We’ll refer to this pot as “public money”; most of it comes from general taxation, but some of it is from non-tax sources (such as the Crown Estate profits).

The Treasury then pays the Sovereign Grant to the Queen, which is currently calculated as the equivalent of 25% of the Crown Estate’s profits two years previously. The amount of the grant isn’t determined by how much the royal family plans to spend.

In any year, the Treasury always pays at least as much as it paid in Sovereign Grant the previous year, so if the Crown Estate’s profits were to go down then the Grant would not (and so would end up being more than 25%). This hasn’t happened yet; since the Sovereign Grant replaced the old system of funding the monarchy in 2011, the estate’s profits have increased each year.

It used to be 15% but was increased this year to pay for refurbishments to Buckingham Palace and will stay at 25% for 10 years.

In 2019/20 the Queen will receive £82 million. Any unspent money goes into the Sovereign Grant Reserve each year.

That doesn’t mean the government is taking the Queen’s private revenue 

It’s incorrect to say that government keeps £360 million of the royal family’s “private revenue”.

In 2017/18, the Crown Estate made about £330 million profit. As we’ve said this all goes into Consolidated Fund before the government pays the Sovereign Grant which is based on 25% of Estate profits. But the Crown Estate isn’t the royal family’s private property.

The Queen herself is part of the state—specifically, Head of State. So the land she owns as Head of State, (meaning the Crown Estate) can be described as the Sovereign’s “public estate.”

The Treasury say of the Crown Estate, “while it is part of the public sector, it is not government property.

“Nor is it part of the monarch’s private estate.”

The Queen does have two private sources of money

The Queen also receives private income from two other sources.

One is the Privy Purse, used to meet the some of the Sovereign’s and royal family’s private and official expenditure. It’s funded by other landholdings, collectively called the Duchy of Lancaster.

These include rural areas in Lancashire and Yorkshire, but also urban holdings in central London near the Savoy hotel. In the year to March 2018, the income from the Duchy was around £20 million.

The other is private investment income from holdings such as from the Royal Stud at Sandringham or Balmoral Castle. These aren’t owned by the “Sovereign” as an abstract entity, but by the Queen personally. As this is private income, we don’t know how much this amounts to.

The Queen pays tax on private income and income from the Duchy of Lancaster.

It’s impossible to know the wider economic benefit of the monarchy exactly

Some of the claims following the Royal Wedding argue that we shouldn’t begrudge the monarchy the public costs from the Royal Wedding (for example security), because they create so much economic benefit.

One estimate came from consultancy Brand Finance who said that in 2017 the monarchy contributed £1.8 billion to the UK economy, of which around £550 million came from tourism.

This is a gross figure (so before the estimated costs have been subtracted). The net contribution estimate is £1.5 billion a year.

This estimate is largely subjective depending on what factors you think should or shouldn’t be included.

For example, the report estimates the monarchy contribute £50 million towards the media industry by providing the inspiration and “mystique” for TV shows like The Crown and plays like King Charles III. It’s up to you to decide whether you think those should or shouldn’t be included.

And even once you decide what influences to include, then trying to put a number on the exact contribution the royal family make to those areas is harder still. Any estimate is going to be extremely uncertain.

Update 28 June 2018

We have updated this piece with new figures for 2018/19.

Update 25 June 2019

We have updated this piece with new figures.

Correction 4 July 2019

The previous version of this article said that money for the Sovereign Grant was generated by the Crown Estate’s profits, rather than from a general pot of money paid into mostly by taxes and other income sources like profits from the Crown Estate. Those profits are used in the calculation of the Grant’s size, rather than strictly “generating” it.

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