Charles Faces Backlash Over Tax Exemption on Queen's $430 Million Fortune

As he begins his reign, King Charles III is facing criticism from some members of the public over the monarch's exemption from paying inheritance tax on the vast fortune left to him by Queen Elizabeth II.

That as monarch, Charles, will not be required to pay inheritance taxes on the late queen's personal fortune or property has been called an "absolute disgrace," by the anti-monarchist group Republic, as Britain is currently in the midst of a cost-of-living crisis.

Inflation in the U.K. hit 10.1 percent in July, its highest level in 40 years.

"In short it's an absolute disgrace. There's no justification for it," Graham Smith, CEO of Republic, told Newsweek about the arrangement. "This has been the case for quite some time that the monarch does not pay inheritance tax when they take the throne. There's absolutely no justification for allowing them to accumulate this enormous wealth."

"We just keep on throwing more money at them and they keep accumulating it while spending more of our money on their day-to-day costs," he continued.

"There needs to be a root-and-branch review of royal funding and they need to be brought into line with the same rules everyone else has to abide by."

King Charles III Inheritance Tax
King Charles III photographed on September 9, 2022. And Queen Elizabeth II (inset) during the State Opening of Parliament, May 18, 2016. The new king faces backlash over the royal tax arrangements which exempts him from paying inheritance taxes on the fortune left to him by the queen. DANIEL LEAL/AFP via Getty Images/CHRIS JACKSON/POOL/AFP via Getty Images

The Royals And Taxation

In 2022, Britain's Sunday Times estimated the queen's personal fortune to be £370 million ($433 million). This wealth is separate from the institutional property associated with the monarch as head of state, which includes the crown jewels, palaces, royal collection artworks and public income from the government.

The late queen's personal wealth also came from privately-owned properties such as Sandringham and Balmoral, jewelry that is not the property of the crown, and income from personal investments.

In Britain, members of the public are expected to pay a 40 percent tax on property inherited over the value of £340,000 ($397,000). If this applied to Charles, he would have to surrender an estimated £148 million ($173 million) to the government if the same rule were to apply to the queen's property.

However, according to custom, the monarch does not pay inheritance taxes on property inherited from another monarch or the spouse of a monarch.

Queen Elizabeth II and King Charles III
Queen Elizabeth II and King Charles III (when he was Prince of Wales) photographed at the State Opening of Parliament, October 14, 2019. The queen began paying income tax in 1993, though the monarch is still exempt from inheritance tax. Paul Edwards - WPA Pool/Getty Images

Though not written into law, in 1993 a memorandum of understanding was drawn up with the agreement of both the queen and the prime minister at the time outlining the taxation of the sovereign.

This was prompted by Elizabeth herself who volunteered to begin paying income and capital gains tax in 1992. Since 1993 the monarch has paid tax on their income as with any other British citizen.

In reference to inheritance taxation, the memorandum said that there is a difference between the property of the crown and the personal property of the monarch.

It states that "it would clearly be inappropriate for inheritance tax to be paid" in respect of the assets held in trust for the crown, while adding:

"In relation to assets which can properly be regarded as private, the arrangements provide that inheritance tax will not be paid on gifts or bequests from one sovereign to the next, but will be payable on gifts and bequests to anyone else."

This means that any personal wealth left to Charles is exempt from taxes but bequests made to other members of the royal family will not be.

The memorandum also provides the justifications for the arrangements, stating:

"The reasons for not taxing assets passing to the next sovereign are that private assets such as Sandringham and Balmoral have official as well as private use, and that the monarchy as an institution needs sufficient private resources to enable it to continue to perform its traditional role in national life, and to have a degree of financial independence from the government of the day."

Public Criticism

However, similarly to the objections raised by Republic, social media users and members of the general public have also voiced their anger at the arrangement for the already wealthy institution of the monarchy, particularly given rising rates of inflation and energy bills.

A dedicated thread on the online forum Mumsnet has been created regarding the subject with many posts echoing sentiments of displeasure.

"Apparently, the monarchy is exempt from income tax in order to protect the wealth of the royal family from being eroded! While the rest of us fight for survival like crabs in a barrel," wrote one user. "This Society has class baked into it. We aren't meant to move up or aspire for greater things. It's a rigged system, you can't tell me it's not."

King Charles III Taxation Criticism
King Charles III at Westminster Hall on September 12, 2022. The king is exempt from paying inheritance tax on the personal property passed from one monarch to another. Henry Nicholls - WPA Pool/Getty Images

Author and activist Claire Heuchan posted her response to the news on Twitter, describing the set-up as "obscene."

"Charles Mountbatten-Windsor is exempt from inheritance tax. It is obscene that he — our new head of state — can hoard this unearned wealth while so many of the people he supposedly represents are dependent on food banks and unable to heat their homes this winter," she said.

Charles became the new monarch the instant his mother died at the age of 96 at Balmoral Castle on Thursday. During his first broadcast to the nation the following day, the new King pledged: "throughout the remaining time God grants me, to uphold the Constitutional principles at the heart of our nation.

"And wherever you may live in the United Kingdom, or in the Realms and territories across the world, and whatever may be your background or beliefs, I shall endeavor to serve you with loyalty, respect and love, as I have throughout my life."

The late queen's funeral will take place on Monday, September 19th, a day which has been declared a public holiday across the U.K.

Do you have a question about Queen Elizabeth II, King Charles III or their family that you would like our experienced royal correspondents to answer? Email royals@newsweek.com. We'd love to hear from you.