The Queen pays most of the taxes to which any UK citizen is liable.

The Queen has always been subject to Value Added Tax and other indirect taxes and she pays local rates (Council Tax) on a voluntary basis.

In 1992, The Queen offered to pay income tax and capital gains tax on a voluntary basis. As from 1993, her personal income has been taxable as for any taxpayer.

Income from the Privy Purse is fully taxable, subject to a deduction for official expenditure. The Civil List and the Grants-in-Aid are not ‘pay’ for The Queen but funding for her official work, they are disregarded for tax purposes.

However, the unique nature of her position of Sovereign makes The Queen exempt from tax in certain situations.

For example, although The Queen’s estate will be subject to Inheritance Tax, bequests from Sovereign to Sovereign are exempt.

This is because constitutional impartiality requires an appropriate degree of financial independence for the Sovereign. The Sovereign is also unable to generate significant new wealth through earnings or business activities.

In addition, since the Sovereign cannot retire, he or she cannot mitigate Inheritance Tax by passing on assets at an early stage to his or her successor.

As a Crown body, the Duchy of Cornwall is tax exempt, but since 1969 The Prince of Wales has made voluntary contributions to the Exchequer. As from 1993, The Prince’s income from the Duchy has been fully subject to tax on a voluntary basis. He has always paid tax, including income tax, in all other respects.

All other members of the Royal Family pay taxes in the same way as anyone else.