$Unique_ID{bob00539} $Pretitle{} $Title{United Kingdom Royal Income and Expenditure} $Subtitle{} $Author{Embassy of the United Kingdom, Washington DC} $Affiliation{Embassy of the United Kingdom, Washington DC} $Subject{royal civil list expenditure income palace family expenses official parliament see tables } $Date{1990} $Log{See Table 1.*0053901.tab } Title: United Kingdom Book: The Monarchy in Britain Author: Embassy of the United Kingdom, Washington DC Affiliation: Embassy of the United Kingdom, Washington DC Date: 1990 Royal Income and Expenditure About 85 per cent of the expenditure arising from the official duties of the royal family is met by public departments - including, for example, the costs of the Royal Yacht Britannia, the Queen's Flight, travel by train, the upkeep of the occupied royal palaces, and State visits overseas. The remainder of the Queen's expenditure is financed from three sources. First, the Queen's Civil List (see below), a payment from public funds approved by Parliament, finances the costs of running the Royal Household and other expenses incurred in the course of her official duties as head of State. Secondly, the Privy Purse, financed from the revenues of the Duchy of Lancaster, meets the cost of expenditure, not met by the Civil List, which is incurred by the Queen as a result of her position as Sovereign. Finally, the Queen's personal expenditure as a private individual is met from her own personal resources. The royal palaces, together with the crown jewels and the royal collections of art, stamps and books, are vested in the Queen as Sovereign but cannot be disposed of - they must be passed on to her successor. They are therefore not her personal property. There are also other items - for example, of jewellery - which the Queen regards as heirlooms and not at her free personal disposal. The Civil List The basic Civil List is paid automatically by the Treasury from the Consolidated Fund under an Act of Parliament, normally passed within six months of the beginning of a reign, which continues in force for six months after the death of the Sovereign (although a revision may take place in the course of a reign). In exchange, the Sovereign surrenders to the Exchequer the revenue from the Crown Estate (35 million Pounds in 1987-88) and certain hereditary revenues. Until 1760 the Sovereign had to provide for payment of all government expenses, including the salaries of judges, ambassadors, civil servants, and the expenses of the royal palaces and households, doing so from hereditary revenues, mainly income from Crown lands, and income from some customs duties, certain assigned taxes and postal revenues granted to the monarch by Parliament. The income from these sources eventually proved inadequate and, when King George III became King, he turned over to the Government most of the hereditary revenue and received in return an annual grant (Civil List) from which he continued to pay the royal expenditure of a personal character and also the salaries of civil servants, judges and ambassadors, and certain pensions. These extraneous charges were removed from the Civil List in 1830. Today, the Civil List covers expenditure on the salaries and expenses of the Royal Household (staff of the Household are generally paid and pensioned on a basis analogous to that in the Civil Service) and royal bounty, alms and special services. Just under three-quarters of the Civil List provision is required to meet salaries costs. Because of the rising costs of running the Royal Household in times of inflation, and despite every effort to make economies, it became impractical to settle the amount of the Civil List by legislation at relatively infrequent intervals. Accordingly, the Civil List Act 1975 established a system whereby payments additional to those provided under the Civil List Act 1972 could be made, subject to annual authorisation by Parliament, together with other departmental expenditure. Under this Act, the Treasury makes annual payments from money provided by Parliament to supplement the Queen's Civil List, annuities to certain named members of the royal family (see below), contributions towards the expenses of other members of the royal family, and Civil List pensions. The payments are by way of grant-in-aid to the Royal Trustees (the Prime Minister, the Chancellor of the Exchequer and the Keeper of the Privy Purse) and are subject to the normal parliamentary `supply' procedure for the approval of government expenditure. The Royal Trustees generally review the working of the Civil List system at least once every ten years, and report to Parliament. This change in the machinery for determining Civil List payments was accompanied by an offer from the Queen, which the Government accepted, to pay from 1976 onwards an annual contribution equivalent to the provision made from public funds towards the official expenses of members of the royal family for whom Parliament had made no specific provision (at present the Duke of Gloucester, the Duke of Kent and Princess Alexandra). Provision for Members of the Royal Family The amounts payable from central funds under the Civil List Acts to members of the royal family in order to meet their official expenses incurred in carrying out public duties are as follows in the calendar year 1988: [See Table 1.: Royal Allowances] The 1972 Act provided that the younger sons of the Queen (Prince Andrew and Prince Edward) should receive 20,000 Pounds annually on reaching the age of 18, and before marriage. This would be increased to 50,000 Pounds after marriage. The Act also provides that a widow of the Prince of Wales would be entitled to an allowance of 60,000 Pounds a year and that the annual amount payable to a future wife of a younger son of the Queen in the event of her surviving her husband would be 20,000 Pounds. Any of these payments may be supplemented by the Royal Trustees under the provisions of the 1975 Act. Parliament makes no special provision for the Prince of Wales, who is entitled, as Duke of Cornwall, to the net revenues of the estate of the Duchy of Cornwall - about 51,400 hectares (127,000 acres) in south-west England and London. At the age of 21 he became entitled to these revenues but voluntarily undertook to surrender half to the Exchequer. After his marriage in July 1981, by agreement with the Government of the day, the voluntary surrender was reduced to a quarter. Taxation As part of the royal prerogative the Queen does not pay tax - either on her private wealth and income, or on the Queen's Civil List - unless Parliament decides otherwise. This immunity extends to income from the Duchy of Lancaster. The income and property of the Duchy of Cornwall are similarly exempt from income tax, capital gains tax and capital transfer tax. Any other income or property of the Prince of Wales is taxed in the ordinary way as though it were his total income or property. The Civil List annuities payable to members of the royal family are exempt from income tax, either wholly or in part, only to the extent that they are used to meet official expenses incurred in carrying out public duties. Payments by the Royal Trustees to cover the official expenses of other members of the royal family, in accordance with normal taxation practice, do not rank as income for tax purposes. Departmental Expenditure About 85 per cent of all expenditure arising from the official duties of the royal family is met by government departments. The costs of the Royal Yacht Britannia and of the Queen's Flight of aircraft (see p 25) are met by the Ministry of Defence. Travel by train on official business by the royal family and staff of the Royal Household is paid for by the Department of the Environment. Other items of expenditure met by government departments include the cost of official travel overseas and the provision of service equerries. Postal services are provided free of charge by the Post Office; the cost of telecommunications is met by the Department of the Environment. The Royal Palaces The Department of the Environment is also responsible for the upkeep of the royal palaces: Buckingham Palace, Windsor Castle, St James's Palace, Hampton Court Palace, Kensington Palace, Kew Palace and the Palace of Holyroodhouse in Edinburgh. Of these, Buckingham Palace, Windsor Castle and the Palace of Holyroodhouse are State residences of the Sovereign. At the Queen's private residences, Balmoral and Sandringham, however, the only costs met by the Department are those for the fuel and electricity required when the court is in residence. Buckingham Palace, built on the site of a house owned by the Duke of Buckingham, has been the Sovereign's London residence since 1837. The present building was erected in the eighteenth century and redesigned in 1825; it was refronted in Portland stone in 1913. Windsor Castle has been a principal residence of the Sovereign for nearly 900 years. Built by William the Conqueror (1066-87) and extended in the fourteenth and fifteenth centuries, it was extensively restored by George IV (1820-30). Notable features are St George's Chapel (fifteenth and sixteenth centuries) and the State Apartments, containing many historic and artistic treasures. The Sovereign's State residence in Scotland is the Palace of Holyroodhouse on the site of an abbey founded in 1128. The original early sixteenth-century royal palace was largely destroyed by Cromwell's soldiers in 1650 and the present building dates from the seventeenth century. The importance in former times of St James's Palace in London is reflected in the fact that ambassadors of foreign states are still accredited to the Court of St James's. Balmoral Castle was built by Queen Victoria and Prince Albert and first used as a royal residence in 1855. The Sandringham estate was bought by Edward VII (then Prince of Wales) in 1863, and in 1871 the existing house was pulled down and replaced by one in red brick. Substantial alterations, considerably reducing the size of the house, have been undertaken.