RULES FOR DETERMINING THE INCOME AND CAPITAL GAINS OF THE PRIVY PURSE ON WHICH TAX IS TO BE PAID
APPENDIX A
1. Introduction
The primary purpose of the Privy Purse (which receives the income distributed by the Duchy of Lancaster and has its own sources of income) is to meet expenditure incurred by, or on behalf of, The Queen as Head of State but not charged to the Civil List. But, to a lesser extent, the Privy Purse also meets some of The Queen's personal expenditure. This annex sets out how the income of the Privy Purse is to be calculated, and the categories of expenditure incurred by The Queen as Head of State which are to be taken into account in arriving at the amount of the income of the Privy Purse on which tax is to be paid, so that tax falls only on that part of the income which is used for The Queen's personal expenditure.
2.
General Rules
The amount of income from the Duchy of Lancaster and from the Privy Purse's other sources of income which is to be taxed in any year is the sum of:
(a) the net surplus earned by the Duchy of Lancaster in the year in question, whether or not
transferred to the Privy Purse in full during that year, and
(b) the full amount of the other income arising to the Privy Purse in that year, calculated in
accordance with ordinary income tax rules,
less
(c) the aggregate of the expenses listed in paragraph 4 below which are met from the Privy
Purse and were incurred in the year concerned.
3. If in any year the amount to be deducted under paragraph 2(c) exceeds the sum of the amounts under 2(a) and 2(b), the excess may be carried forward and added to the amount deductible under 2(c) in the following year.
4. Expenses to be taken into account
i. Amounts paid to the Consolidated Fund to reimburse the cost of Parliamentary and
Section 3 Annuities payable under SI 1990/2018 (or as subsequently amended).
ii Payments made to and in connection with staff employed, or pensioners previously employed, for official purposes; in the case of staff or pensioners whose duties are or were only partly official, the proportion relating to their official duties.
iii The accountancy, legal, administrative and investment advisory costs relating to the
official functions of the Privy Purse.
iv Medical and insurance costs incurred in connection with the The Queen's official
duties.
v Donations, cups, prizes, flowers and presents given in an official capacity.
vi Payments made to other Members of the Royal Family*, in addition to the sums in (i) above, to meet official expenses incurred in assisting The Queen in carrying out duties as Head of State, which would have fallen within the usual scope of Orders made by the Treasury under Section 199 of the Income and Corporation Taxes Act 1988 (expenses necessarily incurred and defrayed from official emoluments) if they had been met from Parliamentary or Section 3 annuities.
vii. The proportion of the costs of maintaining and running the properties and estates at Balmoral and Sandringham which relates to their use for official purposes. No account is to be taken of costs relating to farms, forestry, or sporting facilities.
viii. The cost of uniforms but not other clothing incurred by The Queen and other
members of the Royal Family for official purposes.
ix Any expenses not falling under any of the preceding paragraphs which are incurred by The Queen or other members of the Royal Family in an official capacity or in connection with official duties.
5. Private Proportion of Privy Purse Assets for Capital Gains Tax
As The Queen is not entitled to the assets or capital gains of the Duchy of Lancaster, no account is to be taken of capital gains or losses arising from the disposal of its assets. But The Queen is
* Queen Elizabeth The Queen Mother, The Duke of Edinburgh, The Duke of York, The Prince Edward, The Princess Royal, The Princess Margaret, Princess Alice, The Duke of Gloucester, The Duke of Kent and Princess Alexandra.
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