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This publication is available at https://www.gov.uk/government/publications/sovereign-grant-act-2011-guidance/sovereign-grant-act-2011-guidance
1. Sovereign Grant
The Sovereign Grant Act 2011 came into effect on 1 April 2012. It sets the single grant supporting the monarch’s official business, enabling The Queen to discharge her duties as Head of State. It meets the central staff costs and running expenses of Her Majesty’s official household – such things as official receptions, investitures, garden parties and so on. It also covers maintenance of the Royal Palaces in England and the cost of travel to carry out royal engagements such as opening buildings and other royal visits.
In exchange for this public support, The Queen surrenders the revenue from The Crown Estate to the government which for 2015-16 was £304.1 million. The Sovereign Grant for 2017-18 is £76.1 million.
HRH Prince Philip, Duke of Edinburgh, receives an annual Parliamentary annuity of £359,000 to meet the expenses of carrying out his public duties in support of the Queen.
2. Determination of the Sovereign Grant
Normally the size of Sovereign Grant for a given year is equal to a prescribed proportion (initially 15%) of The Crown Estate’s profit for the financial year two years prior to the year in question. This means that the Grant can be set firmly at the beginning of each financial year, e.g. the Grant for 2017-18 is linked to The Crown Estate profit for 2015-16.
The Crown Estate’s audited accounts are published in the summer. At the time of the Autumn Statement, the Royal Trustees (the Prime Minister, the Chancellor of the Exchequer and the Keeper of the Privy Purse) publish a formal report recommending the amount of the Sovereign Grant for the next financial year based on the formula described above.
If the whole of the Sovereign Grant is not spent in a given year, the surplus is paid into a Reserve Fund, controlled by the Royal Trustees. The amount that may accumulate in the Reserve Fund is capped at about 50% of the audited net relevant resources for that year. To prevent the reserve rising above this level, the Royal Trustees have the power to set a lower level of Sovereign Grant than the formula would generate.
The Royal Household is fully financially accountable. The Royal Household’s business accounts are audited by the National Audit Office (NAO) and laid before parliament. The NAO may also undertake value for money reviews to scrutinise its use of public funds. The Public Accounts Committee (PAC) may in turn investigate these further.
4. Review of the formula for Sovereign Grant
The percentage used for calculating the Sovereign Grant is reviewed every five years. The first review began in April 2016 and assessed whether the 15% proportion value was appropriate. The Royal Trustees recommended an increase in the percentage to 25% to fund reservicing works at Buckingham Palace and Her Majesty’s official duties.
]Buckingham Palace Reserving Programme Summary Report](https://www.royal.uk/sites/default/files/media/buckingham_palace_reservicing_programme_summary_report_0.pdf)
5. Duchy of Cornwall
The Duchy of Cornwall is a private landed estate created by Charter in 1337 when Edward III granted it to his son and heir, Prince Edward (the Black Prince) and all his subsequent heirs. It provides each Duke with an income from its assets. The current Duke is the Heir to the Throne, HRH Prince Charles.
The estate comprises primarily agricultural, commercial and residential property, in addition to which the Duchy has a portfolio of financial investments. The Duchy consists of around 53,390 hectares of land in 23 counties, mostly in the South West of England.
Under the Sovereign Grant Act:
- a grant is to be paid to heirs to the throne who are not Dukes of Cornwall to put them in a similar financial position as if they were Dukes of Cornwall; this means that in future daughters of the monarch, as well as younger sons, could benefit
- if the heir is not the Duke of Cornwall and is over 18, the heir is to receive a grant based on Duchy revenues; the Monarch (who in these circumstances becomes the Duke) receives the Duchy revenues, and the Sovereign Grant is reduced by an equal amount (so in effect, the heir would receive the Duchy income)
- if the Duke of Cornwall is a minor, 90% of the revenues of the Duchy go to the monarch and the Sovereign Grant is reduced accordingly
6. Royal Palaces
The occupied Royal Palaces are held in trust for the nation by The Queen as Sovereign. Their maintenance and upkeep is one of the expenses met by the government in return for the surrender by the Sovereign of the hereditary revenues of the Crown (mainly the profit from the Crown Estate). The Sovereign Grant will allow the Royal Household to set its own priorities and thus generate economies.
The occupied Royal Palaces are:
- Buckingham Palace
- St James’s Palace, Clarence House and Marlborough House Mews
- the residential and office areas of Kensington Palace
- the Royal Mews and Royal Paddocks at Hampton Court
- Windsor Castle and buildings in the Home and Great Parks at Windsor
7. Royal Travel
Sovereign grant covers the cost of The Queen’s travel on official engagements and travel by members of the royal family representing Her. Safety, security, presentation, the need to minimise disruption for others, the effective use of time, environmental impact and cost are taken into account when deciding on the most appropriate means of travel.
Where appropriate, The Queen and other members of the Royal Family use scheduled train services for their official journeys. In addition, The Queen, The Duke of Edinburgh and The Prince of Wales may use the Royal Train for longer journeys in the UK.
The Royal train enables members of the Royal Family to travel overnight and to work and hold meetings during lengthy journeys. It has modern office and communications facilities.
Journeys on the train are always organised so as not to interfere with scheduled services.
The Monarch is not legally liable to pay income tax, capital gains tax or inheritance tax because the relevant enactments do not apply to the Crown. The same is true for the income from the Duchy of Cornwall which is paid to The Prince of Wales. Since 1993, The Queen and the Prince of Wales have paid tax voluntarily in the same way as everyone else does. This is set out in a Memorandum of Understanding on Royal Taxation, updated March 2013.
The Queen is not liable to pay tax on the Sovereign Grant as it covers official expenditure only and, under the arrangements in the Memorandum, tax would not be due.
- tax is paid voluntarily on all the monarch’s private sources of income. Tax is also paid on The Queen’s Privy Purse income (which includes income received from the Duchy of Lancaster) to the extent that it is not used for official purposes
- other members of the Royal Family are fully liable to tax in the normal way. The cost of their official duties is allowed against tax
- The Duke of Edinburgh pays tax on any part of the annuity that is not used wholly, exclusively and necessarily in the performance of his official duties. In practice the whole of the annuity is used for official business
9. The Crown Estate
The Crown Estate is the property of the Sovereign “in right of the Crown”. Since 1760 each monarch has surrendered its revenue to the Exchequer in return for government support.
The profit of the Crown Estate is a reference point for the calculation of Sovereign Grant. The Crown Estate does not pay the Sovereign Grant to the Monarch directly. It makes a payment each year to the Consolidated Fund and HM Treasury makes the payment to the Monarch.
10. Security costs
No breakdown of security costs is available as disclosure of such information could compromise the integrity of these arrangements and affect the security of the individuals protected. It is long established policy not to comment upon the protective security arrangements and their related costs for members of the Royal Family or their residences.