The 1993 Report of the Royal Trustees states that the Queen is not legally liable to pay inheritance tax on assets transferred to her son and heir Charles III. Gifts to anyone other than Charles will be treated as they normally are in the UK and are subject to a 40% tax rate.
The rules on inheritance tax in the UK are clear and unambiguous, the standard rate of inheritance tax is 40% on all assets of an estate above £325,000. The estate may pay a reduced rate of 36% on some assets if you leave at least 10% of the ‘net value’ to charity in your will.
The crown estate has £15.2bn in assets, of which 25% of the profits are given to the royal family as the sovereign grant. These assets cannot be sold by the King. They are in effect surrendered to the government in return for a grant.
A litmus test of our new King’s intent to modernise the monarchy
The King is exempt from inheritance tax in order to preserve “a degree of financial independence from the government of the day.”
King Charles has stated that he wants to modernise the monarchy and slim down the numbers of Royals supported by the State. Paying tax like every UK citizen would be an ideal way of demonstrating his intent, indicating that we have indeed entered a new era. Paying tax like the rest of us would immediately bring the monarchy closer to the people.
These are big calls to make in the earliest days of the reign of the new King. It is a litmus test. The decision will signify the new King’s intent. Whilst we are all sorry for his loss, he now has an early opportunity to show us that he is indeed a King for the 21st Century.
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