Market leading insight for tax experts
View online issue

Prince Charles’s tax affairs scrutinised by MPs

printer Mail

The Public Accounts Committee (PAC) conducted its inquiry this week into the tax affairs of the Prince of Wales and the Duchy of Cornwall. The Duchy of Cornwall was established by royal charter in 1337 as a private estate to provide the heir to the throne (and eldest son of the monarch) with an income.

A Duchy of Cornwall spokesperson said: ‘The duchy is not a company and is not therefore liable to pay corporation tax, and the prince is not entitled to receive any capital gains from the duchy, and therefore does not pay capital gains tax,’ adding that ‘the Memorandum of Understanding on Royal Taxation establishes that capital gains tax is not payable ... [and] the Duchy of Cornwall is not subject to corporation tax. The Duke of Cornwall [Prince Charles] is subject to income tax, and he pays income tax on his income at the normal rates, in the normal way. He does not pay both corporation tax and income tax, and the Duchy of Cornwall is not a separate corporation.’

When asked if the Duchy not paying corporation tax on its income and gains from property investment gave it a ‘competitive advantage’, Paula Diggle, HM Treasury officer of accounts, told the committee: ‘When the Memorandum of Understanding was put together 20 years ago, [the issue] was looked at in great depth. Parliament then accepted that that was a fair method of taxing the monarch and the prince. If the Duke of Cornwall were to be taxed on the corporate income of the Duchy as well as on his income, he would be taxed twice.’

When pressed further on the issue, Diggle answered the Duchy had no competitive advantage ‘because pretty well every other company that holds property reinvests it ... I am not quite saying [no property company pays tax], but they pay very little,’ to which PAC chair Margaret Hodge replied that it was ‘a shocking, shocking, shocking thing’, saying: ‘There is something shockingly wrong with a system where you allow a lot of profits to be made out of property and you are not finding a way of taxing it properly, I have to say, if that is really what you are asserting to the committee: no property company pays tax, so we won’t charge this entity tax.’

EDITOR'S PICKstar
Top