Quirk of British law pays for royals
others, ownership of long stretches of coastline and all the treasure buried in Cornwall.
Those perks have delivered Prince Charles substantial wealth. Income from the duchy has nearly tripled in two decades, to about $28.3 million, last year. But the uproar over Harry and Meghan’s funding has raised uncomfortable questions for the prince and the royals about whether any of their income can truly be considered private.
Coming on the heels of Prince Charles’ brother Andrew being kicked off the royal front lines for socializing with disgraced financier Jeffrey Epstein, such scrutiny is another dent to the royal mystique.
“Harry has chucked a grenade into the forecourt of Buckingham Palace,” said David McClure, author of a book about the royal family’s wealth. “It’s weakened the foundations of the royal family and their money, and it’s raised issues that don’t just apply to Harry but have been bubbling under the surface for at least a decade.”
Among the biggest of those is the special treatment afforded Prince Charles’ property empire, an estate that, among other things, pays for the upkeep of his country mansion and furnished 5 million pounds last year for the families of Harry and his older brother, Prince William.
The duchy has a vast footprint, stretching from the rocky shores of Cornwall to south London, and from medieval castles to a granite-walled men’s prison. It recently bought a 400,000-square-foot supermarket warehouse north of London.
A spokeswoman for the duchy said in a statement that Parliament had “confirmed its status as a private estate” and that the Treasury had agreed that its tax status did not confer an unfair advantage.
“The prince has always ensured it is run with the interests of its communities as an equal priority,” the statement said.
The duchy’s holdings reflect how the royal family’s wealth has become concentrated in the hands of Prince Charles and his mother, Queen Elizabeth II, whose own estate, the Duchy of Lancaster, paid her 21.7 million pounds last year.
Together, the two duchies bankroll more than a dozen members of the family, supplementing a taxpayer grant of 82 million pounds last year reserved for official duties and the upkeep of several palaces.
Despite lawmakers once deeming its current income “an accident of history,” the Duchy of Cornwall has mostly avoided harsh questions, in part by playing up its interest in traditional architecture and sustainable practices across its humbler holdings: scores of farms, much of Dartmoor National Park in Devon and rivers throughout Cornwall. But analysts say that obscures fierce commercial instincts.
“If it looks like a duck and quacks like a duck and swims like a duck, you sort of assume it is a duck,” a Labour lawmaker told duchy officials during a 2013 hearing. “The Duchy of Cornwall looks and behaves like a corporation.”
But the duchy does not pay taxes like a corporation. Instead it sits in a legal limbo, using its royal status to skirt corporation and capital gains taxes even as it argues that, as a private estate, it has no obligation to open its books. The duchy said its capital gains were all reinvested in the business, obviating the need to tax them, and that only companies paid corporation tax.
Prince Charles pays tax on his duchy income only voluntarily and after deducting what analysts believe to be about 10 million pounds that he deems official and charitable spending. He has also written off tens of thousands of pounds that he pays for gardening at Highgrove, his country house, on the basis that members of the public were occasionally invited in.
The duchy’s powers go even further.
Prince Charles inherits the possessions of anyone who dies in Cornwall without a will or next of kin, a power that in some years has yielded hundreds of thousands of pounds. He funnels the money into charities after deducting his costs.
A similar carve-out gives Prince Charles unusual power over some homeowners on the Isles of Scilly, a picturesque archipelago off the southwestern coast of England, and in Newton St. Loe, a village near Bath.
People like Davis own their homes, but the duchy owns the ground on which they are built. Such an arrangement is not uncommon in England, but homeowners would usually have the option to buy the land. Not on some duchy land.
That enables the duchy to charge small ground rents to homeowners grandfathered into long leases, like Davis. Once those leases lapse, it can also raise rents to thousands of pounds per year, making it difficult for people to sell or mortgage their homes.
In one case, a couple built a house on the Isles of Scilly, only to have the duchy force them to sign a lease bequeathing the property to Prince Charles’ estate upon their death, said Lord Berkeley, a Labour peer in the House of Lords, who tried unsuccessfully to push through a bill in 2017 ending the duchy’s special landlord status and removing its tax exemptions.