King Charles III can keep away from paying tens of millions in inheritance tax on the Duchy of Lancaster property as a result of an previous rule designed to guard the royal household’s wealth.
His Majesty robotically inherited the property – value over £652m – following the loss of life of his mom Queen Elizabeth II final week.
Under UK regulation, inheritance tax is paid at 40% in case you go away property valued above a sure threshold to your family members after you die.
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But the King won’t must pay the levy due to a rule launched by the UK authorities in 1993, which mentioned inheritance tax doesn’t must be paid on the switch of property from one sovereign to a different.
Then Conservative Prime Minister Sir John Major mentioned the circumstances of a hereditary monarchy have been “unique” and “special arrangements” have been required.
He steered property of the monarchy have been susceptible to being “salami-sliced away” via capital taxation over many generations.
He instructed the Commons: “I believe that is necessary to protect the independence of the monarchy, and I would not wish to detract from that independence in any way.
“The considerations that I’d have have been the preparations to be some other could be the hazard of the property of the monarchy being salami-sliced away by capital taxation via generations, thus altering the character of the establishment in a means that few individuals on this nation would welcome.”
‘Clearly inappropriate’
A Memorandum of Understanding on royal taxation from 2013 also states that it would be “clearly inappropriate” for inheritance tax to be paid on assets “that are held by the Queen as sovereign moderately than as a non-public particular person”.
It said the monarchy needs “enough non-public assets” to carry out its function in nationwide life and to have a level of economic independence from the federal government.
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The doc mentioned the Prince of Wales confirmed that he intends that these preparations will apply to him on his accession to the throne.
Sky News has contacted Buckingham Palace for remark.
The Duchy of Lancaster property generated income of £24m and had property value greater than £650m on the finish of March this 12 months, in response to its monetary information.
The monarch isn’t legally obliged to pay any tax within the UK. But the Queen started to pay earnings and capital positive factors tax on a voluntary foundation in 1993, and King Charles is anticipated to do the identical.
The former Prince of Wales additionally voluntarily paid tax on his earnings from the Duchy of Cornwall property, which has now been handed to Prince William, the brand new Prince of Wales.
Anyone apart from King Charles who has inherited non-public property from the Queen must pay inheritance tax.
Explaining the tax break, Fisher Jones Greenwood Solicitors has beforehand mentioned the exemption is designed “to safeguard the erosion of the Sovereign’s wealth”.
They mentioned: “The monarch doesn’t work or trade to ‘grow’ their estate as a normal individual would during their lifetime.
“If the monarch’s property was repeatedly subjected to inheritance tax then their wealth would deplete dramatically.”
Source: information.sky.com”