Part Four ended with the papers nobody outside gets to see. This part is about what happens when some of them surface, and what they show about rules written for one family.
When Elizabeth II died in 2022, Balmoral and Sandringham passed to Charles. They’re privately owned estates, not Crown property. Any other family inheriting two country estates could face a hefty inheritance tax bill, depending on the reliefs available. Charles didn’t owe a penny of it. I wanted to know how on earth that can be legal.
When Privilege Is Written Into the Rules
Inheritance tax: the royal exception
For most families, inheritance tax is charged at 40% on whatever an estate is worth above the tax-free allowances. The basic one is £325,000, and leaving your home to children or grandchildren can add up to £175,000 more. Transfers to a spouse or civil partner, some gifts to charity and other reliefs can mean no tax is due at all. [1]
The monarch is in a much more privileged position. HM Treasury’s 2023 memorandum says the Sovereign is not legally liable for inheritance tax, because the rules everyone else lives by don’t apply to the Crown. Since 1993 the monarch has instead agreed to pay it voluntarily on certain gifts and bequests, so not every royal inheritance is tax-free. [2]
Property held with the office is one thing: the Royal Collection, official residences and other assets kept for future sovereigns and the nation. The Treasury says these shouldn’t be taxed as anyone’s personal inheritance because they aren’t the monarch’s private possessions. [2]
On paper, that makes sense. But “held for the nation” is doing a lot of work. The Royal Collection Trust says the Collection is held in trust, not owned privately by the King, and that works are displayed in royal palaces, museums and galleries, including through loans. Some visits involve buying a ticket, although the money helps pay for its care. [3] That still leaves me with a question. If it’s held for the nation, how much say does the nation actually have over how it’s managed?
But the exemption also reaches private property. Under paragraphs 2.20 and 2.21 of the memorandum, private assets left by one monarch to the next are disregarded for inheritance tax, and so are lifetime gifts to an heir who actually succeeds to the throne. That’s the route Balmoral and Sandringham took. [2] [4]
Diabolical. These aren’t palaces held for the nation. They’re as private as estates get. Private enough to belong to him outright, but not private enough to be taxed when they pass to the next king.
Paragraph 2.22 adds one more route for assets passing to the reigning monarch when a former monarch’s consort dies. If Queen Camilla outlived Charles and later left assets to the monarch of the day, that transfer could fall under the rule. Anything she left to anyone else would not. [2]
And yes, Queen Camilla. When she married Charles in 2005, we were told she would be known as Princess Consort once he became King. In 2022, Elizabeth II said it was her “sincere wish” that Camilla be known as Queen Consort, and by the coronation invitations in 2023 she was simply Queen Camilla. [5] No law had to change. A promise just quietly stopped applying, which tells you a lot about how much weight royal promises carry once the moment arrives.
The King’s gifts to anyone else fall under the normal inheritance-tax rules, except that his tax-free threshold isn’t £325,000. Paragraph 2.23 sets it at nil. Other members of the Royal Family generally pay inheritance tax under the normal law, as the Treasury confirmed again in July 2026. [2] [4]
So the same estate can be taxed in two completely different ways depending on who gets it. If Charles left Balmoral to anyone other than the next monarch, the whole value would be open to inheritance tax with no tax-free threshold, though the usual reliefs could still apply. Leave it to William as the next King, and nothing is due.
So the exception isn’t that the whole Royal Family can pass on anything tax-free. It’s a protected route for private wealth to pass from one monarch to the next.
The Treasury’s case for it is that estates such as Balmoral and Sandringham serve both private and official purposes, and that the monarchy needs financial independence from the Government. [2]
Funny kind of independence. As Part One showed, the Sovereign Grant alone is £137.9 million of public money this year. [6] The estates are private when it comes to tax, official when it comes to justifying the exemption, and the public still funds the official side either way.
The payments are also voluntary. Paragraph 2.33 lets the King or the Prince of Wales withdraw from the arrangement with notice, from the following 6 April or later, and paragraph 2.35 says any withdrawal or change must be published. Neither has withdrawn, as far as the published record shows. [2]
Nice work if you can get it. Imagine writing to HMRC: I don’t fancy paying my tax bill this year, so I’m giving notice that I won’t, from next April. See how far that gets you.
Special legislation for one family’s finances is nothing new. The Civil List Act 1837, for example, set out provision for Queen Victoria’s household.
Now look at the other end of the tree. Lose your job this year, and if you qualify and you’re single and over 25, the basic Universal Credit allowance is £424.90 a month to cover food, gas, electricity and everything else except rent, which is assessed separately. [7] Nobody drafts special legislation so you can afford to sit somewhere warm this winter. And you certainly don’t get to give notice that you’d rather not pay your taxes.
King’s Consent: the bills the Palace sees first
Most of us assume the King only sees a law at the very end, when he gives Royal Assent and it becomes law. I did. But for bills that touch royal interests, there’s another procedure that puts them in front of the Palace much earlier, often before Parliament has even seen them.
King’s Consent is required when a bill affects certain Crown interests: royal prerogative powers, hereditary revenues, private property or the Duchy of Lancaster. A bill affecting the Duchy of Cornwall may need Prince of Wales’s Consent as well. The parliamentary authorities decide whether consent is needed. [8] [9]
In plain terms, if a bill touches the King’s money, property or powers, his advisers get to see it before Parliament does. He can’t throw it in the bin. Parliament still debates it, and consent is almost always granted. But he doesn’t need to bin anything. Seeing it first is the advantage, because that’s when you can quietly ask for it to be changed.
It happens a lot more than you’d think. A Guardian investigation in 2021 found that more than 1,000 laws had gone through the consent process during Elizabeth II’s reign. [10]
The department sponsoring a bill writes to the Palace early, normally before the bill is introduced, and must give it at least 14 days to consider. The Government’s 2025 legislative guide says the letter explains the bill’s purpose and how it affects royal interests. [9] [11]
We’re told Parliament is sovereign and the monarch is a neutral, ceremonial head of state. Yet here is a formal channel that lets the Palace read laws about its own interests before our elected MPs do. Funny kind of neutral.
Consent is announced just before a bill’s final debate and vote, called third reading, in each House. If it isn’t announced, that vote can’t happen. It isn’t the same as Royal Assent, which comes at the very end when a bill becomes law, and granting consent doesn’t mean the King approves of the bill. Ministers advise whether to grant it, and they normally say yes, even to bills the Government opposes. [8] [12]
On paper that’s a formality. But formalities rely on good behaviour. Nothing in law guarantees how the next monarch, or the one after, will treat that early look at the laws that affect them. And the real question is what happens between the Palace receiving a bill and Parliament hearing that consent has been granted, because there’s evidence the early access has already been used to press for changes.
In 2021 the Guardian published government correspondence from the National Archives about a 1973 companies bill. Elizabeth II’s private lawyer had objected to rules that might have revealed the Queen’s shareholdings. Ministers then devised an exemption for certain investors, including heads of state, and the legislation passed in 1976. [13]
There it is. Her lawyer objected, and the law was written so the public couldn’t see what she owned.
A more recent case comes from Scotland, which has a similar Crown Consent procedure. In 2021, documents obtained through Freedom of Information showed lawyers acting for Elizabeth II raising concerns about proposed heat-network legislation. A Scottish minister agreed to an amendment protecting privately owned royal land from compulsory purchase for the scheme, and the exemption went into the law. Buckingham Palace said consultation makes sure legislation applies to the Crown accurately and consistently. [14]
Neither case shows Charles has intervened in current legislation, and consultation can have proper technical purposes where a bill touches property or powers with an unusual legal status. But the public record usually says only that consent was signified, not what passed before it. In both cases it took archived letters and information requests to find out. If royal advisers ask for changes to laws that affect their interests, shouldn’t the public be told what they asked for, what ministers agreed to and why?
I think we should. Twice now, the paperwork shows the same pattern: a private request, a quiet change, and a law that ends up protecting royal wealth. For a family that’s supposed to stay out of politics, that’s a very useful tool to have.
Offshore investments and the paperwork nobody saw
This is where the papers really did surface. Two major leaks showed that published accounts don’t tell the whole story. They involve different pots of money, so it’s worth being clear which is which: one was the Duchy of Lancaster, held in trust for the Sovereign and providing the Queen’s private income. The other was the Crown Estate, which isn’t the monarch’s personal money at all. [15]
The Paradise Papers, 2017
Journalists found that the Duchy of Lancaster, which provided income to Elizabeth II, had invested through funds in the Cayman Islands and Bermuda. In 2005 it committed £7.5 million to a Cayman Islands fund, and some of that money eventually reached BrightHouse, a rent-to-own retailer criticised for its lending and its treatment of customers on low incomes. [16]
The Duchy said its indirect BrightHouse holding was worth only £3,208 at the time, that its advisers chose the funds, and that it gained no tax advantage from investing offshore. The reporting showed investment links that weren’t visible in the Duchy’s published accounts. [16]
I know BrightHouse from the other side of the counter. Years ago I worked for a distributor that supplied it, and I still remember one Mario game for the Nintendo Wii. In the shops it was around £50. Bought from BrightHouse on weekly payments, by the time the agreement was paid off, it had cost the customer hundreds of pounds, something like ten times the shop price as I remember it. I nearly fell off my chair. That’s a business built on charging the poorest people the most, and some of the Queen’s private estate money ended up invested in it, even if only indirectly.
Its customers paid through the nose, and the leaked papers showed the Duchy had an indirect stake in the company charging them.
The Pandora Papers, 2021
These concerned the Crown Estate, not the monarch’s private money. In 2018 the Crown Estate paid £66.5 million for a Mayfair property at 56-60 Conduit Street. The seller, Hiniz Trade & Investment, was registered in the British Virgin Islands, and leaked ownership records linked it to relatives of Azerbaijan’s president, Ilham Aliyev. [17]
The Crown Estate said it had carried out the checks UK law requires and had been given details of the company’s ultimate beneficial owner. It said there was no apparent reason to stop the deal at the time and announced a review after the reporting. The leaked records didn’t show where the company’s original purchase money came from. [17]
The International Consortium of Investigative Journalists documented the Aliyev family’s wider network of offshore property companies, while noting that owning an offshore company isn’t in itself evidence of wrongdoing. [18]
Neither leak proves money laundering or royal tax evasion, and a Crown Estate purchase isn’t Charles’s personal transaction. What they exposed is a gap between knowing what an estate is worth and knowing where its money goes, who is on the other side of a deal and how those decisions are checked.
That gap matters to all of us. The Crown Estate isn’t the King’s private wallet, but the Sovereign Grant’s funding formula is linked to Crown Estate profits, as Part One showed. [6] When it buys a building from a company linked to Azerbaijan’s ruling family, I want to know who checked, what they found and why it went ahead. The Crown Estate says it did the checks the law requires. I’d just like to see them.
What would meaningful scrutiny look like?
The Sovereign Grant is audited by the National Audit Office, and the Duchies publish independently audited accounts. Those checks are real. They don’t tell you much about private inheritances, confidential consultations over legislation or the checks behind particular investments. [6]
So here’s what I’d ask for. Publish a valuation of what passes from one monarch to the next, so we can see what the exemption is worth. Publish the letters between the Palace and government departments about bills that touch royal interests, and what was changed as a result. Publish the workings behind the King’s tax bills, not just the totals. And when the Crown Estate does a deal with an offshore company, publish who checked it and what they found.
None of that is radical. It’s what we’d expect of any minister or public body. A special legal arrangement isn’t automatically wrong, but the tax rules and the consent procedure weren’t written for anyone outside one family, and the most revealing details, the consent lobbying and the offshore investments, came out through archives and leaks rather than the published accounts.
These privileges are much older than the present reign. Part Six follows them back into colonial expansion and the transatlantic slave trade.