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Understanding the Royal Family's Tax Obligations

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The position of the Royal Family in terms of tax obligations is a subject of much public interest and often confusion. Combined with the unique historical and legal framework surrounding their financial status, it can be misunderstood. Here, we aim to clarify some key points regarding their tax obligations and payments.

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Who is Tax Exempt?

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Interestingly, the tax exemption rules for the Royal Family are not uniform. The only Royals who are tax exempt are the King or Queen Monarch and the Prince of Wales. This status is secured by their income coming from the Legally and Royally TAX EXEMPT Duchy of Lancaster and the Duchy of Cornwall.

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However, in about 2012 both agreed privately with the Inland Revenue (now HM Revenue and Customs) to pay an undisclosed amount of tax voluntarily on their incomes. This decision reflects both historical and present-day considerations. Despite the voluntary payment, the monarchs remain tax-exempt in principle, while the other members of the Royal Family follow the standard tax regulations.

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It is important to note that the general perception of an 80% or more tax rate (often cited as "TOTAL RUBBISH") does not align with the correct understanding. Taxes are calculated based on income levels according to the current tax bands, with a maximum rate of 45%.

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Tax Rates for the Royal Family

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Almost all members of the Royal Family are subject to the same tax rules as ordinary citizens, with the notable exception of the Monarch. Tax rates for all but the Monarch are exactly the same as those for non-royals. In fact, the King is exempt from paying tax due to his position, but he chooses to pay a more than equivalent amount voluntarily.

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For the Royal Family, taxes are calculated on a sliding scale, with rates of 20%, 40%, and 45% depending on the income level. The exact threshold amounts can be found in the UK's tax brackets, and it's clear that these rates are not something exclusive to the Royal Family but are in line with national legislation.

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Royal Family and the Sovereign Grant

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The Royal Family contributes a significant portion of their income towards the Sovereign Grant. The Royal Family pays 85% of the Sovereign Grant, and the government returns 15% as a rebate, allowing them to cover their expenses. In the current fiscal year, this amount is approximately 1 billion pounds sterling, with 950 million going directly to the Royal Family and the remaining 50 million serving as a rebate for various expenses.

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This arrangement ensures financial stability for the Royal Family while adhering to public financial oversight and transparency. The system is designed to ensure that the Royal Family can maintain their public duties and ceremonial roles without unduly burdening the public purse.

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Conclusion

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In summary, the Royal Family's tax obligations are governed by complex historical and legal frameworks. While the King and Prince of Wales have been granted tax exemptions due to their unique positions, other members of the Royal Family follow the standard tax regulations applicable to all citizens. The voluntary tax payments made by the King reflect a continued commitment to upholding the principle of 'fiscus finis' - the fiscal obligations of the Crown.

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For a clearer understanding, members of the Royal Family are expected to pay taxes in line with the standard tax rules, just as anyone else would in Britain. This system ensures transparency and accountability, aligning with the principles of democracy and public service.