The Rt. Hon. Sir John Major KG CH

Prime Minister of Great Britain and Northern Ireland 1990-1997

1993Prime Minister (1990-1997)

Mr Major’s Commons Statement on Royal Taxation – 11 February 1993

Below is the text of Mr Major’s statement made in the House of Commons on 11th February 1993 on the subject of Royal taxation.


The Prime Minister (Mr John Major): With permission, Madam Speaker, I should like to make a statement about my further discussions with Her Majesty the Queen about taxation and Civil List payments.

On 26 November, I told the House that the Queen had asked me to consider the basis on which she might voluntarily pay tax on her personal income and also take responsibility for certain payments under the current Civil List arrangements. His Royal Highness the Prince of Wales had made a similar request in respect of his income from the Duchy of Cornwall.

I am now able to tell the House that the further discussions between the Treasury, the Inland Revenue and the royal household have been completed, and that Her Majesty and His Royal Highness have accepted the arrangements proposed.

The royal trustees are today publishing a report setting out the future tax arrangements for both the Queen and the Prince of Wales. The report includes a memorandum of understanding recording the detailed rules which will apply for income tax, capital gains tax and inheritance tax. The agreement takes effect from 6 April 1993. It provides for the Queen to pay income tax on all her personal income, whether from investments or from other sources. In addition, tax will be paid on that part of the privy purse income which is used for private purposes. There will be no tax payable on income from the Civil List, since that is used to meet official expenses and is not a source of personal income for the Queen; the same will apply in respect of other payments and facilities provided by the state for official purposes.

Her Majesty will also pay tax on any realised capital gains on her private investments and on the private proportion of assets in the privy purse.

In the unique circumstances of an hereditary monarchy, special arrangements are needed for inheritance tax. There could, for example, be no question of taxing assets such as the royal palaces which the Queen owns as sovereign and not in a private capacity. The agreement reached with Her Majesty therefore provides that inheritance tax should apply to all bequests or gifts by the sovereign other than to transfers of assets from one sovereign to his or her successor. As the House will know, the Prince of Wales is already fully liable to tax, except on the income that he receives from the Duchy of Cornwall. From 6 April 1993 he will pay income tax on his Duchy of Cornwall income to the extent that it is used for private purposes; this arrangement will replace the voluntary payment of 25 per cent. of Duchy income that he currently makes to the Consolidated Fund. The Inland Revenue will administer these arrangements, and the tax received from the Queen and the Prince of Wales will be included in the Inland Revenue’s accounts. The Queen and the Prince of Wales will both have the same confidentiality on tax matters as any other taxpayer. Although these arrangements are voluntary, both the Queen and the Prince of Wales intend that they should continue indefinitely. Any changes in taxes or tax rates will automatically be applied.

The report of the royal trustees also sets out the new arrangements that are being made for the management of the royal collection of paintings and other works of art. The royal collection is held by the Queen as sovereign and passes from one sovereign to the next. The collection cannot be sold to generate private income or capital for the use of the Queen, and the Queen does not benefit personally from the income generated by the collection.

So as to make the status of the royal collection clear, Her Majesty intends that the maintenance, conservation and presentation to the public of the royal collection should in future become the responsibility of a new charitable trust. The trust will fund itself from the income generated from admission charges and other sources. The new arrangements should improve access to the royal collection for the whole country.

The report also confirms that the Government have accepted the Queen’s generous offer to refund the cost of a further five of the parliamentary annuities payable to members of the royal family under the Civil List legislation, in addition to the three annuities that she already refunds. That will apply from 1 April 1993. The result will be that only the annuities paid to Her Majesty Queen Elizabeth the Queen Mother and to His Royal Highness the Duke of Edinburgh will continue as a direct charge on the Consolidated Fund.

I am confident that the House will welcome these initiatives by the Queen and the Prince of Wales. The new arrangements will ensure that, so far as possible, the Queen will pay tax on her personal income according to the normal tax rules and will herself take responsibility for the Civil List payments to almost all other members of the royal family.