The Crown Estate – estimated at more than  billion in assets – is now owned by King Charles III.  But he won’t have to pay the UK’s 40% inheritance tax.  Here’s why

The Crown Estate – estimated at more than $34 billion in assets – is now owned by King Charles III. But he won’t have to pay the UK’s 40% inheritance tax. Here’s why

The Crown Estate - estimated at more than $34 billion in assets - is now owned by King Charles III.  But he won't have to pay the UK's 40% inheritance tax.  Here's why

The Crown Estate – estimated at more than $34 billion in assets – is now owned by King Charles III. But he won’t have to pay the UK’s 40% inheritance tax. Here’s why

King Charles III is in for a tax benefit that most Britons and even many wealthy Americans could only dream of: The head of the British monarchy is exempt from UK inheritance tax.

Queen Elizabeth II’s death includes the transfer of her personal fortune of approximately $500 million to her first son, Charles. That means he doesn’t have to send about $200 million of Queen Elizabeth’s $500 million fortune to the taxman.

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But it also includes a change in ownership of the Crown Estate: a portfolio of assets and properties worth $34.3 billion. Her holdings include Buckingham Palace and land and properties across London and the UK

Certainly, the Crown Estate is held in trust. This means that King Charles III cannot sell any of his assets. But the royal family still collects around 15% of the profits from the estate through the ‘Sovereign’s Grant’. Last year, the Crown Estate earned $311 million.

The tax exemption is among the list of luxuries that separates most Britons from the royal family in the UK, where voters are required to pay a 40% tax on estates worth more than $377,000.

In the US, where such levies are derided as a “death tax”, the estate tax is anything but a dying breed. Although most estates in America are not large enough to trigger a federal estate tax—an estate must be worth more than $12.06 million to do so—17 states and the District of Columbia have laws that can tax one’s inheritance or property or both.

A paltry $200 million?

Avoiding a 40% tax on $500 million is not insignificant. But since wealth is often a relative term, the legacy levy on Charles would not amount to much of a grab for the royal purse.

Queen Elizabeth II was the longest-serving monarch of the United Kingdom, reigning over 14 Commonwealth realms as well as Britain, for seven decades. During that time, the Crown Estate’s wealth in property and real estate valued together grew by a huge amount – but nowhere near the fortunes of the world’s richest people.

The Crown’s assets are eclipsed, for example, by the fortunes held by Elon Musk, Jeff Bezos and Bill Gates.

Queen Elizabeth inherited an estimated $81 million after her mother’s death in 2002 — passing on assets ranging from prized horses and jewelry to prized paintings and Fabergé eggs.

Over the years, these assets plus a healthy collection of properties — including Sandringham House in England and Balmoral Castle in Scotland — have increased her total net worth to around half a billion dollars.

Elizabeth received income through the Sovereign Grant, a taxpayer-funded pool of nearly $100 million in 2021 and 2022 designed to cover official travel and the running costs of various properties, including Buckingham Palace, the Queen’s official residence.

This grant stems from a centuries-old agreement in which King George III surrendered his income from Parliament to receive a fixed annual payment for himself and future generations of the royal family. Charles is now to receive income from the annual grant.

Death and taxes

Although Charles can cheat the “death tax” – the taxes seem to be certain. Even for rights.

The Royal’s official website said the Queen had offered to pay income and capital gains taxes voluntarily in 1993 – despite not being legally required to do so – and had voluntarily paid local taxes.

And according to a “Memorandum of Understanding on Royal Taxation” written in 2013, Charles indicated that he would voluntarily pay taxes once he inherited the throne.

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This article provides information only and should not be construed as advice. Provided without warranty of any kind.

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