The Royal Family of the United Kingdom is financed in a number of different ways. Its main source of income is the Sovereign Grant (the Civil List until 2012), which currently costs £86.3 million a year. This comes in the form of a grant from the government that meets the costs of the royal residences, staffing, travel and state visits, public engagements, and official entertainment. Other sources of royal income are revenues from the Duchies of Lancaster and Cornwall, income from private investments and trusts, and a parliamentary annuity.

The British Royal Family on Buckingham Palace balcony after Trooping the Colour 2023. Photo Credit: © Katie Chan via Wikimedia Commons.

The Sovereign Grant

In 1760, in one of the first Acts of Parliament passed in the reign of King George III, the government of the day committed to supporting the cost of running the monarchy. King George – and succeeding monarchs – were given an annual grant by the government in exchange for the income from the Crown Estates. The last monarch to be granted a Civil List income before it became known as the Sovereign Grant was the late Queen Elizabeth II. Her grandfather, King George V, had voluntarily surrendered his right to the £50,000 a year he was entitled to from the Civil List because the United Kingdom was suffering from the Great Depression at the time, and many of his subjects were themselves short of money.

Under the terms of the 1760 Act, the British Royal Family also retained rights to income from the Duchy of Lancaster. This consists of 45,000 acres (18,500 hectares) of land in England and Wales and is estimated to be worth £650 million and provides the monarch with around £25 million pounds a year. This income is tax-free, but the late Queen agreed to pay income tax in 1993, and the monarch now pays tax on income from the Duchy. He (or she) is sometimes referred to as the Duke of Lancaster, although this title was officially discontinued in 1422.

The Prince of Wales receives no money from the British government. He holds the title of Duke of Cornwall and owns large tracts of land in Cornwall and other parts of the United Kingdom (including the land on which the Oval cricket ground stands). The Duchy of Cornwall’s holdings comprise around 135,000 acres (55,000 hectares) and are estimated to be worth about one billion pounds. It provides an income of £24 million a year, which the Duke of Cornwall (aka the Prince of Wales) voluntarily pays tax on at the highest rate (45%).

King Charles and Queen Camilla waving from the balcony of Buckingham Palace. Photo Credit: © Isaac Mayne/DCMS via Wikimedia Commons.

The Cost of the Royal Family to the British Taxpayer

So, how much does the Royal Family actually cost the British taxpayer? Traditionally, the answer has been that, if the Royal Family were to be abolished, then every individual in the United Kingdom would receive merely an amount similar to the cost of a packet of crisps (potato chips) in return. The implication was that the average citizen would think that the Royal Family was actually good value for money and would opt to retain it. Having a Royal Family also boosts many businesses, including tourism, in hard-to-quantify ways. Although people would still travel here to see Stonehenge and Stratford-upon-Avon, the tourist business – and the careers of tourist guides – would suffer from the loss of the Royal Family in the United Kingdom.

Recently, King Charles III has been forced to dip into royal reserves of cash after overspending to cover the costs of an unprecedented year of royal activity. Buckingham Palace’s expenditure grew by more than £5 million in 2022 to £107.5 million due mainly to the Platinum Jubilee celebrations, the late Queen’s funeral, which cost £162 million, and the coronation of King Charles, which took place in May 2023. The cost of this event has never been formally quantified, but it is estimated to have been between £50 and £100 million.

Payroll costs presented one of the biggest annual increases during 2022/23 and rose by £3.4 million to £27.1 million, with staff given a pay rise of five to six per cent. Housekeeping and hospitality costs soared as the palace opened its doors again. Food and drink costs also rose from £600,000 to £1.5 million. The royals have always invited people into their homes, and around 50,000 people come to Buckingham Palace every year to garden parties. In 2022, the royal household welcomed over 95,000 guests to their official residences in 107 receptions, 142 lunches and afternoon teas, 44 investitures, seven garden parties and 38 dinners.

British Royal Family Expenditure. Photo Credit: © Bloomberg.

Included in this number are people who have been given an honour by the country – unofficially known as ‘a gong’. Singers such as Elton John, Tom Jones and Paul McCartney have been given knighthoods and can now be addressed as ‘Sir’ Elton, Tom or Paul. Their pictures often appear in the media holding the medal they are given as part of this process. Paul McCartney said, after he received his knighthood, that ‘It was one of the best days ever.’ A well-known actor, the late Sean Connery, also received a knighthood, but he asked to be given it at Holyrood Palace in Edinburgh, where Scottish people are often honoured.

All of this costs money, of course, and has to be absorbed as part of royal expenditure. Whether it would be significantly cheaper if the United Kingdom was a republic is highly debatable. Most people invited to one of the royal households accept the invitation (even if they have republican sympathies), and they receive their honour, whether it is a medal such as a knighthood, an MBE, OBE or CBE (standing for Member, Order or Commander of the British Empire) or simply a pat on the back with an invitation to one of the royal garden parties.

The Crown Estate

Royal expenditure is mainly covered by the Sovereign Grant, which has remained at £86.3 million since 2021, meaning that income from the grant has fallen by over £12 million in real terms. This is supplemented by another £10 million, principally generated from rental income and the Royal Collection Trust. The Sovereign Grant is funded by profits from The Crown Estate, which is worth an estimated £20 billion. Profits from the estate are given to the Treasury which, in return, provides the Royal Family with the grant to fund the running costs of the royal household. Until 2017, 15% of The Crown Estate’s profits were returned to the Royal Family in this way. This share was raised to 25% in 2017 to fund the £369 million renovation of Buckingham Palace. This palace was originally called Buckingham House (hence its name) and was the property of the Duke of Buckingham. It was purchased by George III in 1763 for what is now an insignificant sum in property terms of £20,000.

How the Crown Estate Works. Photo Credit: © BBC.

A major complaint about the British Royal Family is the cost of transporting them as they fulfil their engagements around the world. The royals took 179 helicopter trips at a cost of just over one million pounds and sixty-five chartered flights in 2022. King Charles has committed himself to decarbonising emissions, and spending on travel fell from £4.5m in 2022 to £3.9m in 2023. The most expensive journey made by the King and Queen was a charter flight from Brize Norton in Oxfordshire to Rwanda in June 2022 to attend the Commonwealth Heads of Government Meeting, which cost £186,571. The second was a £146,219 trip to Berlin and Hamburg in March 2023, when Charles and Camilla made their first official overseas state visit.

No one doubts that members of the British Royal Family are very hard-working. They carry out between two and a half and three thousand duties every year. (The figure for 2022 is 2700.) Buckingham Palace also receives a vast amount of correspondence – 183,000 letters in 2022. Each one is replied to by one of the royal staff, although not all can be read by the monarch. Most Britons still feel that the royals are ‘value for money’ – but this can always change.

British Royal Family Finances in Summary

The British Royal Family is funded mainly by the Sovereign Grant, which replaced the Civil List in 2012. It currently stands at £86.3 million a year and has remained unchanged since 2021. £3.6 million came from property rentals, and £57.8 million was spent on royal houses. Net expenditure for the Royal Family in 2022 was £107 million, of which £27.1 million was in payroll costs, and £2.7 million on gas and electricity bills for the various royal houses.. £3.9 million was spent on royal travel in 2022, of which £1,020,297 was on helicopter flights.

Tourists in front of Buckingham Palace. Photo Credit: ©London & Partners.