Royal Finances Explained: Where Does Queen Elizabeth II Actually Get Her Money?

The British royal family are cagey when it comes to money. But each year, a slew of financial documents give the public a glimpse into their spending.

Publicly known sources of income for the Queen include the Sovereign Grant and profits from an estate called the Duchy of Lancaster. Other members of the royal family benefit from other estates, and many are known to have private sources of income.

The Sovereign Grant

The Sovereign Grant is a payment made to the Royal Household by the U.K. government every year. The value of the grant is determined by how much money "the Crown Estate"—an extensive portfolio of land surrendered by George III back in 1760—has brought in.

That estate—which includes Regent Street, a major central London shopping destination—generates much of its money through rent. The estate's net income, which goes to the government, is used as an index to work out how much money to pay the sovereign.

Since 2016, the Royal Household has received the equivalent of 25 percent of the Crown Estate net income each year. Official documents released Tuesday show the sovereign received £82 million ($105 million) for the 2019-20 year.

None of this money actually ends up in the Queen's pocket. It covers things like travel for official engagements, staff costs for the household and maintenance of royal residences like Buckingham Palace.

The current 25 percent figure is set drop after renovations of Buckingham Palace are completed. Leftover cash is transferred to the Sovereign Grant Reserve.

Monarchs used to receive a "Civil List" figure—again determined by the net income of the Crown Estate. This funded things including staffing, royal garden parties and parliamentary allowances for some senior royal family members.

Separate "grants-in-aid" determined by the government's Department of Culture, Media and Sport, previously funded the maintenance of royal residences.

Introduced in 2012 after 2011's Sovereign Grant Act, the new grant was intended to simplify spending on the royals and subject it to "the same scrutiny as other government expenditure."

Is the Sovereign Grant a good deal for the taxpayer?

Some argue that the Sovereign Grant offers a good deal for the taxpayer, as most of the profit from the Crown Estate goes straight into the government.

But royal finances expert David McClure, author of Royal Legacy, told Newsweek this is a misconception. Although the estate still bears the "crown" title, it is de facto public land, he argued. Her Majesty's Treasury, he said, "totally accepts that the Crown Estate is public property."

Crown lands have been historically used to fund government expenditure, even before the time of George III. Before William III, the sovereign administered these funds. But after the Glorious Revolution of 1688, that responsibility began to fall to parliament.

As the U.K. transitioned to a constitutional monarchy, the power of the sovereign waned and the costs of government increased. This saddled the monarch with personal debt, leading George III to surrender control of all revenue from the Crown Estate.

Each monarch technically surrenders the estate again at the start of their reign, but, as McClure argued, "The sovereign isn't doing us a favor by handing this over." He continued: "If you're going to reverse that, you'd have to say 'the Queen should be paying for the running of the country."

The Queen's "Semi-private" Estate

The Queen also makes money from her own estate: the Duchy of Lancaster, one of only two remaining royal estates. The net income of the duchy is the main source of funds for the "Privy Purse"—the monarch's private income. Last year, the Queen's income from the duchy topped £20 million ($26 million).

Although it's usually called the Queen's private estate, McClure argued it's really "semi-private" as it is attached to Elizabeth II's title, rather than the woman herself. If she were to abdicate or die, the duchy would pass to the next monarch.

Much of the estate's profits go to official expenses for the Queen and Prince Philip. It also subsidizes the cost of public duties for several other members of the family. "We don't know if the Queen also pays for the private living expenses of those royals," McClure said.

The money is controlled and administered by the Queen's personal accountant, the Chancellor of the Duchy of Lancaster (currently David Lidington) and the Keeper of the Privy Purse (Sir Michael Stevens). The Queen pays tax on money from the Duchy that doesn't go on official expenses.

The duchy's official accounts, however, aren't particularly revealing when it comes to the details. What is known is that the estate itself is "booming," according to McClure—which raises questions in itself.

Two decades ago, the Queen was able to cover her costs on less than half of today's sum. "What is happening to the extra £10 million?" McClure said. "I've asked that question. Maybe it's because costs have gone up. I don't know the answer. One suspects there is a bit more money bubbling around."

What about other members of the royal family?

The only other remaining royal estate—the Duchy of Cornwall—benefits Prince Charles and Camilla, Duchess of Cornwall. Like the Duchy of Lancaster, it's "semi-private" and tied to the role of heir, rather than Charles himself.

Charles received nearly £22 million ($28 million) from his estate in 2018, documents revealed. Income for both duchies has soared in recent years, McClure noted.

"One suspects the two duchies are one of the main wellsprings of the wealth of the House of Windsor," he added. "The reality is, they have been making record profits, and [the royal family] certainly don't want to publicize that."

When you take their duchy incomes into account, the Queen and Prince Charles aren't actually as rich as you might expect. "Although they are wealthy, they aren't in the mega-wealthy stage. They're not in the stage of some of the really grand aristocratic families," McClure said. "They may be worth hundreds of millions of pounds but they're not worth billions."

It's not clear exactly where all this profit from the Duchy of Cornwall goes, but it covers the official expenses for Charles and Camilla, and pays for some other members of the family. For example, the public duties of Princes Harry and William usually receive funding from their father's estate.

Beyond a lump sum noted in each year's report, McClure said, it's hard to know exactly where this money goes. "They've been asked that but they refuse to give any breakdown," he added.

Many royal family members are also thought to benefit from inheritance trusts. Prince William and Prince Harry, for example, both earned a share of their late mother's £17 million estate ($21 million), as Forbes previously noted. It's thought the pair also benefited from a family trust set up by the Queen Mother, McClure said.

Members of the family are also free to earn other kinds of private income. Prince William, for example, was a paid air ambulance pilot for the East Anglian Air Ambulance from 2014 to 2017. But he donated this money to charity.

How wealthy family members actually are is hard to pin down. "The reality is, one has very little information," McClure said. "The royal family is extremely sensitive about the royal finances. And one suspects one of the reasons why the royal family is so sensitive is that they want to portray themselves as less rich than they are."

Are they worth the money?

The monarchy's cost to the British public is significant. But it's hard to argue their impact on tourism isn't similarly hefty. It's impossible to say exactly how much money the royal family bring in from tourism, but it's also hard to deny they provide a "boost," McClure said. "Because otherwise they wouldn't have weddings, right?"

If the £82 million ($105 million) Sovereign Grant is the only publicly-funded figure you look at, it may seem a fair price to pay. But the family also incur enormous hidden costs to the British public—most notably for security, McClure explained. The Metropolitan Police provide dedicated security staff for high-profile members of the family. The costs are paid by the taxpayer, but they're not covered by the Sovereign Grant.

Security convoys provided by the force escort royals wherever they go. A convoy for the Duke and Duchess of Cambridge made headlines after a police motorcycle was involved in a crash with an elderly woman.

When the royals travel outside London, local police may need to step up—landing town councils with a hefty security bill, McClure said. Outside of travel, major investment is also required to safeguard royal residences like Buckingham Palace, Kensington Palace and Frogmore Cottage.

The actual cost of this round-the-clock security is kept tightly under wraps—for security reasons. But McClure said its "more than likely" in the order of £100 million ($128 million) per year. Revealing specific costs could expose security weaknesses, McClure added. Even announcing the total sum has risen or fallen, year on year, is a risk.

"Whenever you see any just small aspect of the royal family, you have to think about the security implications and how much it's costing," McClure said. But, he added, "this whole area is fragmented. Because its fragmented, it's very difficult to get an exact figure of the cost."

Given the significant hidden price of security, it's impossible to know exactly how much the royals cost the British public. But it's also impossible to know how much they really contribute in terms of increased tourism.

So, are the royal family good value? At the very least, they're certainly expensive.