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King Charles III will not have to pay inheritance tax on the Duchy of Lancaster estate which he has inherited from Queen Elizabeth.
Under a clause agreed in 1993 by the then prime minister, John Major, inheritance tax does not have to be paid on the transfer of assets from one sovereign to another. This means the King avoids the 40% levy applied to assets valued at more than £325,000.
The agreement signed almost two decades ago states that inheritance tax should apply to all bequests or gifts by the sovereign, other than the transfers of assets from one sovereign to his or her successor.
Major suggested the assets of the monarchy were at risk of being “salami-sliced away” by capital taxation through generations, and would change the nature of the institution.
However, according to the Guardian, King Charles has volunteered to follow his mother’s lead in paying income tax. The Queen volunteered to start paying income and capital gains tax on the estate in 1993, though she was legally liable to do so.
At the end of March 2022, the Duchy of Lancaster had £652.8m of net assets under its control, delivering a net surplus of £24m in the form of property and financial assets.
