The King is set to receive an extra £80 million from the taxpayer over the next two years, following a recalculation of the financing mechanism for the Sovereign Grant yesterday.
His annual Government funding of £86.3 million will remain flat for the fourth consecutive year next year but will be increased by just under £40 million in both 2025 and 2026.
Under a funding system that ties the Sovereign Grant to a percentage of the Crown Estate property empire’s income, the 74-year-old king will benefit from an increase in offshore wind farms.
Following a review conducted yesterday, that formula will be reduced from 25% to 12%.
The Crown Estate, which owns rights to the seabed up to 12 miles out, is expected to increase its annual profits in England, Wales, and Northern Ireland from £442.6 million in 2022-23 to over £1 billion in 2023-24 and 2024-25 as a result of fees paid by offshore wind farm companies.
Buckingham Palace wrote to the Government in January, saying that the King did not want to benefit from the wind farm development, but that he will now do so in part for at least two years.
The extra funds will be used to complete a 10-year, £369 million makeover of Buckingham Palace by March 2027, as well as to address a backlog of other royal residence property maintenance before the Sovereign Grant formula is calculated again.
The adjustments were agreed upon following a long-overdue five-year review of palace finances by Prime Minister Rishi Sunak, Chancellor Jeremy Hunt, and the King’s treasurer, Sir Michael Stevens, the Keeper of the Privy Purse.
The monarchy, according to Mr. Hunt, is a source of “immense national pride and constitutional strength, widely admired around the world.”
“For almost 300 years, Kings and Queens have surrendered the profits from the Crown Estate to the British people, and in return, the Government has provided a fraction of that to properly support the King in undertaking his official duties.” He continued.
“The new Sovereign Grant rate reflects the unexpected significant increase in the Crown Estate’s net profits from offshore wind developments while providing enough funding for official business as well as essential property maintenance, including completing the 10-year reservicing of Buckingham Palace.”
According to the royal trustee’s report, Crown Estate profits will increase to £1.04 billion in 2023-24 and £1.05 billion in 2024-25, implying that the Sovereign Grant could be £124.8 million in 2025-26 and £126 million in 2026-27, a jump of nearly £38.5 million and then £39.7 million over the current rate.
If the 25% formula had been maintained, the monarchy would have gotten £260 million each year.
As the reigning king, King Charles technically controls the Crown Estate, which includes Regent Street and other areas of London’s West End. In practice, however, it is a separate property corporation set up to generate revenue for the government.
In 1760, George III agreed to surrender the earnings in exchange for a fixed payment from the government as a symbolic gesture, acknowledging how monarchs have gradually turned over responsibility for paying for the needs of the state to Parliament since 1688.
Earlier monarchs were forced to use Crown estate revenue to help pay for the civil service, defense, and national debt, but their successors would have gone bankrupt if that had continued: the Crown Estate’s £442.6 million profit is dwarfed by the estimated £1,189 billion in UK public spending this year.