Tax Break

John Fisher, international tax consultant

The Windsor Saga

Who by car crash? Who by suicide? Who by execution?

One of the perennial challenges of the writers of successful soap operas is finding original ways to write actors, who have had enough, out of the script. They can’t all be sent off to Canada, and the public sometimes doesn’t like what it gets. When, broadcast on Christmas Day 2012,  Downton Abbey’s Matthew Crawley died in a car crash on the way back from visiting his wife and new-born son, the outrage was almost tangible. One nutter even tweeted: ‘Why oh why Lord are you testing me…let alone on the day your son was born?’.

‘It’s the BBC, they want us to do a series.’

The British Royal Family has, of course, been a real-life soap opera at least since the Queen let the cameras into Buckingham Palace a half century ago. Writing people out of the script is a lot more complicated than Downton Abbey. Tragically, they have had the car crash and the sex scandal(s), while one of their number (plus household) is about to head for Canada. Lacking the imagination of Downton creator Julian Fellowes, others just get sidelined or – like old underground trains – are retired from public service.

The latest ‘Rexit’, that of Prince Harry and his family, appears to be attracting attention, less because of the human element, and more because of the budget. That isn’t what writers want to see – it detracts from the fairy tale script, and places the whole event in the grubbiness of the real world.

The British press is full of that bombastic and pompously self-righteous term: ‘The British Taxpayer’. How are they going to live? How much is it going to cost ‘us’? While that last question may be appropriate for Leninists, Trotskyites, and Corbynistas, it is not the ticket for a country whose electorate just returned a Conservative government with an 80 seat majority.

He also surrendered America

The Queen is not a pauper surviving on handouts from the State. Monarchs across the centuries amassed huge fortunes from – inter alia – rape, pillage and murder that gave them direct or indirect control over the means of production and human capital. Nice people all. On assuming the throne in 1760, George III surrendered his income from the ‘Crown Estate’ (basically, his property) in favor of an annual payment from Parliament (the Civil List). The Crown Estate was effectively placed into trust for the State, and the Treasury received the income. That state of affairs lasted for over 250 years until, 7 years ago, the Civil List was replaced by the Sovereign Grant which set the payment to the monarch at 15% of the total net revenues of the Crown Estate (temporarily increased to 25%).  Add to this the Royal Family’s  private wealth from the Duchies of Lancaster and Cornwall, as well as the occasional  flutter on the horses, and the Queen is not short of a pound or two.

Thus, as the right to own private assets is still embodied in British law, and as the Sovereign Grant – as successor to the Civil List – is a contractual agreement to pay royalties at a fixed percentage  in perpetuity for the surrender of all control of the Crown Estate by George III, why is it anybody’s business how the wealthy Queen finances her grandson’s welfare? Were the monarchy to be dissolved today in anything other than a communist-style revolution, the royals would be entitled to the two duchies (as at present) and a financial settlement in respect of their rights to income from the Crown Estate. They wouldn’t be living on a council estate as depicted by Adrian Mole creator Sue Townsend in ‘The Queen and I’.

The British Taxpayer can’t even feel indignant over the income tax and capital gains tax position of the monarch anymore. While a king or queen cannot pay tax (it is, after all, HER MAJESTY’s Revenue and Customs), the Queen and Prince Charles have been paying voluntary amounts since 1993 that are supposedly designed to shadow the position of the rest of us.

There is one gaping exception. One of the subplots in Downton Abbey is the recurring issue of Death Duties, today known as Inheritance Tax. It serves as the reason great family after great family is forced to sell their stately home or significant parts of their estate. Under the Queen’s arrangement with her Revenue and Customs, everything she leaves to her successor is not liable to Inheritance Tax (as well as everything inherited from her mum). While it might be argued that the properties included in the Crown Estate (such as Buckingham Palace and Windsor Castle) do not belong to her, Sandringham and Balmoral definitely do (her father even had to buy Balmoral off his abdicating brother), not to mention the assets held by the Duchies.

A parody of a soap opera

So, if the press wants to get on its soap box, lay off the Sussexes – that’s a family affair – and concentrate on the death taxes. Of course, were the position to change tomorrow, Her Majesty could transfer all her assets to Charles immediately, and would only have to live 7 years to avoid Inheritance Tax. At 100, she would be a year younger than her mother when she died. Long live the Queen!

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One thought on “The Windsor Saga

  1. Great blog post – but slightly lacking in real tax details (just the 7 year wait) and more of a Speakers Corner rant than anything else. Loved it.

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