| Royal
Taxation
The
Queen has always been subject to Value Added Tax and
other indirect taxes and she has paid local rates (Council
Tax) on a voluntary basis. However, The Queen in 1992
offered to pay income tax and capital gains tax on a
voluntary basis. From 1993, her personal income has
been taxable like any other taxpayer and the Privy Purse
is fully taxable, subject to a deduction for official
expenditure.
The
Civil List and the Grants-in-Aid are not remuneration
for The Queen and are thus disregarded for tax.
The Queen’s estate will however be subject to
Inheritance Tax, but Sovereign to Sovereign bequests
are exempt. This is because constitutional impartiality
requires an appropriate degree of financial independence
for the Sovereign, also because the Sovereign is unable
to generate significant new wealth through earnings
or business activities. So, the Sovereign cannot retire
and cannot mitigate Inheritance Tax by passing on assets
at an early stage to his or her successor.
As
a Crown body, the Duchy of Cornwall is tax exempt, although
since 1969 voluntary contributions have been made by
The Prince of Wales to the Exchequer. From 1993, The
Prince's income from the Duchy has been fully subject
to tax on a voluntary basis. He has always paid tax,
including income tax, in all other respects.
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