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Sep 13, 2022
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King Charles III, who received a fabulous inheritance, was exempted from tax

After the death of Elizabeth II, her son, who became King Charles III, inherited property worth tens of millions of dollars from his mother. But the new British monarch is not required to pay inheritance taxes. Why this happens and how it is perceived in society – this topic is widely discussed in the media on both sides of the Atlantic.

Having ascended the throne after the death of the longest-reigning Queen Elizabeth II, King Charles III is exempt from paying taxes on his royal inheritance, according to Fox Business.

The British king will not have to pay taxes on the newly inherited property of the Duchy of Lancaster worth more than $750 million. The 45,000-acre estate brought the Queen over $27 million last year and includes a luxury hotel.

For reference: the Duchy of Lancaster is a collection of real estate owned by the British monarch (also bearing the title of Duke of Lancaster). This duchy includes many architectural and natural monuments in the counties of Lancashire, Staffordshire, Yorkshire, Cheshire and others in central and northern England, as well as in London and Wales. The main sources of income for the Duchy are considered to be agricultural land, rental of historic properties and financial investments. In 2017, it was revealed that the Duchy of Lancaster had invested around £10 million in offshore funds in the Cayman and Bermuda, but it was said that all these transactions were legal and subject to audit.

A law passed by the British Parliament in 1993 exempts the king from paying taxes on property inherited from the death of another monarch. In the United Kingdom, inheritance tax is 40% and applies to estates worth more than $377,000.

The then Conservative Prime Minister, John Major, stated that the circumstances of the hereditary monarchy were “unique” and that “special measures” were required. The head of government suggested that the assets of the monarchy risk being “sliced ​​into salami” due to the taxation of capital over many generations. Major told the House of Commons, “I consider it necessary to protect the independence of the monarchy, and I would in no way wish to diminish that independence.”

The 2013 Memorandum of Understanding on Royal Taxation also states that it would be “clearly inappropriate” to pay inheritance tax on assets “that belong to the Queen as sovereign and not as a private individual”.

The document says that the monarchy needs “sufficient private resources” to fulfill its role in national life and have a certain financial independence from the government. The memorandum also mentions that the Prince of Wales (now King Charles III) has confirmed that he intends to apply these agreements to himself upon accession to the throne.

However, since 1993, Queen Elizabeth has paid taxes on the capital gains brought in by the Duchy of Lancaster, but it is unclear if the king will continue to follow in his mother’s footsteps. However, according to Sky News, Charles III is expected to do the same.

In any case, had it not been for the 1993 inheritance tax exemption for monarchs, Charles III would have had to pay nearly $200 million in property taxes. Lawyers explain that the exemption from the tax is intended “to protect against the dilution of the wealth of the sovereign.” According to them, “the monarch does not work and trade to “grow” his fortune, as a normal person would do during his life. If the property of the monarch were repeatedly subject to inheritance tax, his fortune would decrease dramatically.”

Any person other than the king who inherited private property from the queen would have to pay inheritance tax.

In the meantime, Prince William has inherited the Duchy of Cornwall from his father, valued at over $1 billion.

The entire Crown property has over $30 billion in assets from various properties and properties, including Buckingham Palace. In addition, the royal family has an annual income funded by British taxpayers through a sovereign grant.

In exchange for transferring all profits from property to the UK government, the monarch receives from the treasury the equivalent of 25% of the profits from Crown property.

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