Why the King's tax return leaves unanswered questions

0:02Sky News, the full story first.

0:12The King has published his tax returns, but the palace isn't being quite as transparent as they'd like you to think. This is why.

0:25How does a banana trigger a CIA-backed coup? Do AirPods herald the arrival of a new global order? What do LED lights say about the future of humanity? I'm Ed Conway, and in each episode of my new podcast, Stuff Matters, I take an object, crack it open, and reveal the world-shaping forces hidden inside. This is economics told through the things we think we understand. Search Stuff Matters on your podcast app to listen and follow.

1:16Charles pays it voluntarily. And now for the first time, we've been told just how much. £12.9 million in the most recent year and more than£30 million since he became king. Historic, yes. Transparent, not so much. Because while we now know the final number, we certainly don't know all the workings behind it. We don't know the king's full private income. We don't know exactly what was deducted as official expenditure or spent on public duties before tax. We don't even know the full value of his private wealth. What we don't have is the bigger question here, I think, because we know he's paid that much tax.

1:56You're like, wow, that's a huge amount of tax. But if we don't know his complete earnings, how can we ever look at what he pays in tax meaningfully? That's the bigger question here. I spoke to our royal correspondent, Laura Bunduk, joined by forensic accountant Professor Atul Shah. Laura, we're going to have a proper look at these numbers. But before we do, just explain, how does the king earn his money? And do we have any idea of how much he's actually worth? That's tricky, isn't it? OK, look, let's just look at what money he gets from me and you. He gets the sovereign grant, which is a set percentage of the money that comes from the crown estate.

2:36The sovereign grant is the lump sum he gets to basically fund the work he does. So it's quite simple. He's head of state, he's head of nation, he's head of the Commonwealth. So it's to pay for that and for the working royals. For 2025 to 2026, it was£132.1 million, of which£60 million was going straight to the refurbishment of Buckingham Palace. Remember, that's this 10-year programme that's coming to an end very soon. It's not just the sovereign grant, though. We know he gets money from the Duchy of Lancaster. Just explain what the Duchy of Lancaster is. We often hear it mentioned. Yeah. So these are these ancient historic royal estates.

3:16They're private. The one of the monarch is the Duchy of Lancaster and the heir, in this case, Prince William, is the Duchy of Cornwall. And it's a mega portfolio of land, of commercial property as well. Well, as the name suggests, the King's is focused around parts of the north, but it does include other kind of surprising assets there as well. That is worth£687 million, those assets, if you were to try and sell them off. It's a lot of money. So he's got the sovereign grant. He has the Duchy of Lancaster. And one must also presume, being a rich individual, he will have private investments that he gets a return on as well.

3:55OK, so let's get to the nitty gritty. How much is his tax bill? Or actually, we shouldn't call it a tax bill because he doesn't have to pay tax. We should call it a tax donation. Donation. OK, so he paid himself in a way because it's His Majesty's Reverend Year in Customs. So for 2425, which is as far as we go to, he paid£12.9 million. It's a lot of money and it puts him in presumably the top taxpayers in the country. Well, if you believe these lists, he's in the top 100 taxpayers. That's what they've told us. What we don't have is the bigger question here, I think, because we know he's paid that much tax.

4:34You're like, wow, that's a huge amount of tax. But if we don't know his complete earnings, how can we ever look at what he pays in tax meaningfully? That's the bigger question here. Let's bring in Atul at this point. I mean, Atul, so in essence, from what Laura was saying, we know what the king has paid in terms of tax. We just don't know how they arrived at that number. Absolutely. And also, in a way, we can tell more or less that it's a very low number compared to the income that he gets. So like if he was a top rate taxpayer at 45%, a 14.5 million tax bill suggests an annual income of 30 million, which cannot be true because we've got loads of other interests, including, for example, Balmoral, Sandringham, land, commercial property, etc.

5:26And then, of course, this whole portfolio of investments, which we have been told he has, but we haven't been told anything about the value of the portfolio or the income that the portfolio generates. So definitely it's not full taxes. Given the amount of money that he has paid in tax, given estimates of the scale of his personal estate, even a couple of years ago, was hovering just a little bit less than two billion pounds. Is it unfair for me to assume that the king is earning annually a figure in excess of a hundred million pounds? I would say 200 at least. 200 million at least. Let me bring Laura back in at this point, Laura.

6:09This is where it all starts to get just a little bit tricky for me because there is so much that we don't know. Let's just talk specifically about the Duchy of Lancaster for a second. This revenue raiser for the king, and of course we've got the Duchy of Cornwall as well for Prince William. Huge amounts of money can be earned from this, but we can't even trust the figures there, can we? Because as I understand it, any money that the king spends in pursuit of his public duties is tax deductible. Yeah, that's one of the oddities about all of this. Look, I don't know how much you earn, do I? No, you certainly don't.

6:45I'm going to guess it's slightly less perhaps than the king's assets. I don't know how much tax you pay. I don't know what investments you have because as private individuals, we do have a right to that privacy. So I would just always have that on your shoulder when we're asking these sorts of questions. There's lots of questions always about the duchies, especially, and the legitimacy of them as private estates. I get that, but this is what they are at the moment. But these are eye-watering sums. Don't get me wrong here. I'm holding it at the front of my mind, largely because the taxpayer is shelling out the best part of£400 million to do up Buckingham Palace.

7:26And today we learned that the king isn't actually ever going to sleep there. Yeah. Does that annoy you? Yeah. Why is that annoying you? Because I would argue King and Camilla have lived in Clarence House decades now. Would you really make them up sticks to move to apartments in Buckingham Palace just so we can say that's where they live? No, not necessarily. But what I wouldn't do is spend£400 million updating a palace so that the King can earn more money through tourist revenue. Because that's what's going to happen, isn't it? The line from the royals is that they're not going to stay there. It's going to be a kind of a ceremonial headquarters.

8:00There'll be greater access for the public who have to pay to get in, the money going straight to the king. They have to pay a lot of money to get in, actually. I was looking at this. It's not open much of the year, Buckingham Palace. It's in the summer months. If you were to turn up today,£37 to look round those rooms. That's the cost of an on-the-day. To look round the place that we own via the Crown Estate. To look round our shared national asset that is Buckingham Palace's state rooms. Look, do we want to get hung up about where the king and queen live? Do we need them to live in Buckingham Palace?

8:33I mean, they've got plenty of places that they can go and live in, don't they? They have. He's got Highgrove. He's got Clarence House. He's got the private estates in Norfolk, San Gingham and obviously Balmoral as well. It's the perception, isn't it, of Buckingham Palace? I suppose you look at the balcony. Look, the royal standard will fly at Buckingham Palace if the king is 500 metres down the road in Clarence House. It has done ever since he became king. Why doesn't that money just go straight to the Treasury? That's the big question, isn't it? But it's not even about profits necessarily for this, is it?

9:04It's more about the public having access to this building more. So it's very limited at the moment. If me and you can look around this more often, more frequently, then is that a better thing? I mean, how much money it makes? It's a drop in the ocean compared to what we're talking about with the sovereign grant, isn't it? They're never going to let me behind the velvet rope. You know that. You know that. Atul, though, I just want to bring you in again. Look, we keep using this word transparency and quite patently that we do not have transparency when it comes to the figures. But there are other little details in here that also we're perhaps not making absolutely clear.

9:38I mean, the king doesn't pay taxes in the same way that the rest of us does. He's not paying council tax. He is voluntarily paying income tax. I just wonder, do you think that is sustainable now? Do you think that it is tolerable in the long term that we don't have access to the books, just the bottom line of one page of them. When you dig deep, it's like they own something, but they don't own it. They inherit something, but they don't inherit it. I mean, hang on, what is it? Do they actually own it? So I think a lot of these hypocrisies and contradictions have been hidden under the carpet for a long time.

10:16And really, as you rightly say, Neil, they're completely, completely unsustainable. So if the family wants to be sustainable, i.e. they want to keep going as being a royal family, then the public has to accept them. For the public to accept them these days, they really do have to modernise in the way they didn't for so long because it was just accepted, wasn't it? And I think the key to modernisation is transparency because if they're not transparent, it is completely weakening them as an institution. Which I understand, but if we talk specifically about the Sovereign Grant for a second, the amount of tax paid by King Charles and Prince William is a fraction of the money that they receive back.

10:56If they are, as Attle points out, and as everyone basically understands, earning hundreds of millions of pounds a year, why are we paying them anything in the first place? I thought this was a life of service, not money for a job well done. I think the palace would say the work that the royal family does for the nation here and overseas as ambassadors for the nation overseas. And they would point to perhaps most recently the state visits to the US, for example, where the king at a really difficult diplomatic moment went to Congress, delivered his message in perhaps a way no other head of state could do.

11:36It was the king saying the words and they packed a punch at that point. And, you know, the palace might point to the fact that as a result of that, tariffs on Scottish whiskey were lifted, what have you. But that sounds like the job of a diplomat hired by the foreign Commonwealth office who should be paid for what they do, not a head of state. But ultimately, there is a difference, though, because it's the king. He is a diplomat, isn't he? Because he is there representing us, the people of Great Britain there. He comes as monarch. There is definitely something he brought to the table. I'm just saying he is operating within the world, which he can.

12:08True transparency looks very, very different. But this is a slight shift. Is it the first straw in the wind? Maybe. I don't know. Atul, what about the criticism that's always made of Harry and Meghan? You know, look at them dining out on their royal reputation. They monetize their titles. I mean, what is the House of Windsor doing, if not that? And, of course, taking advantage of all the other taxes that they don't have to pay? Yeah, I mean, we haven't even begun to speak about inheritance tax, Neil. All of this is inherited wealth, inherited property, inherited land. And again, Britain has a long history of nobility and elite power.

12:47But then when we went towards democracy, and that's also why we have inheritance tax, right? So here again, why does that not apply to any of the assets of the king? We need to not just look at accounting, but also revisit the whole governance of the estates of the royal family. Governance is a real issue, actually. I mean, if you look, we've got the very glossy Duchy of Lancaster report here. There's a photo of the senior people at the duchy. It's a room pretty much full of white men, pretty privileged white men as well. They do have to ask themselves quite considerably now, because if that's the leadership of the duchy, how does it actually translate back to the real people that are concerned that are living within what is this massive portfolio?

13:35Well, look, Laura, OK, given the fact that a slimmed down working royalty was costing us more than the chubby one from a few years ago, we've got Buckingham Palace being renovated to the cost of almost 400 million and the king and queen choosing not to stay there. This level of transparency was designed to curry favour with the British public. Do you think it's going to work? Yeah, I mean, that is a problem. Just look at those numbers exactly. So 2728, the sovereign grant, and we're taking off the Buckingham Palace thing, because that's paid for them, is 99.9, so£100 million, basically. If you go back just three years, it was just over£50,£51 million here.

14:13So it's like a doubling within that short space of time. how is it costing so much more? Because the palace telling us, well, we've got to maintain these really old buildings. We need to invest more in cybersecurity. We're a massive risk. They are, of course, a massive risk. It's the royal family. I get that. We need to improve the heating systems. They've just sort of been left to rack and ruin. And we're told, yeah, new boilers at Windsor Castle is£11 million. You know, you hear all that, but it is a huge jump in the amount of money they're getting. And if you look at polling, so there's an Ipsos poll quite recently that shows that support is dropping.

14:48And support drops even more when you look at younger people. And that is the issue for the world. We come back to this time and time again. People aren't accepting them, or if indifference starts to creep up about them, then they can do all they like in maintaining these palaces and what have you, going around the world, speaking in Congress. But if we're not listening anymore as a people, then it's falling on deaf ears. And that's when those massive sums of money start to grate even more. I think you may have a point. Laura, Professor Atul, thank you both very much indeed.

15:23And that is your lot for this week on This Is Why. Do scroll back in the feed if you like what you've heard and always remember to get in touch with your thoughts. Why at sky.uk. Have a lovely weekend. We're back again Monday.

15:40How does a banana trigger a CIA-backed coup? Do AirPods herald the arrival of a new global order? What do LED lights say about the future of humanity? I'm Ed Conway, and in each episode of my new podcast, Stuff Matters, I take an object, crack it open, and reveal the world-shaping forces hidden inside. This is economics told through the things we think we understand. Search Stuff Matters on your podcast app to listen and follow.