King Charles reveals £12.9m payment, but the calculation behind it remains hidden

King Charles has disclosed a £12.9m tax payment for 2024-25, a historic move that has placed royal finances under fresh scrutiny. The figure arrived with the Royal Household’s annual financial report, but the headline number does not answer every question.

The announcement matters because the monarch’s tax position is unlike that of ordinary taxpayers. King Charles is not legally required to pay income tax, capital gains tax or inheritance tax. Instead, he makes voluntary tax payments under a long-running arrangement with the government, known as the Memorandum of Understanding on Royal Taxation.

That arrangement dates back to 1993, when pressure over the cost of the Royal Family led to changes in how royal taxation was presented. It has been updated over time, most recently after Queen Elizabeth II’s death and the change of monarch.

For most people, tax is not optional. Employees usually have income tax taken through PAYE, while self-employed workers file returns and account for expenses. The King’s arrangement sits outside that normal framework. Dan Neidle, founder of Tax Policy Associates, told the BBC that a voluntary payment should not be treated in the same way as a legal tax demand.

The Royal Household says the King pays VAT, employer taxes and local rates in line with requirements. But the central issue is the personal tax figure, and that remains difficult to analyse.

The report states that His Majesty’s tax payable for 2024-25 was £12.9m, up from £11.7m the previous year. It also says he has paid more than £30m since becoming King. Buckingham Palace presented the disclosure as part of a wider transparency push, but the report does not show how the £12.9m figure was calculated.

That missing breakdown leaves major gaps. The King has agreed to pay income tax on private income, on Privy Purse income not used for official duties, and capital gains tax on certain private asset sales. Yet the public cannot see how much of the bill came from each category.

The Privy Purse is one of the King’s private income sources. It is largely funded by the Duchy of Lancaster, the estate attached to the reigning monarch. The Royal Household report says the Privy Purse received £25.2m from the Duchy of Lancaster in the year to 31 March. However, that is not the King’s full income picture.

The Royal Household also refers to other personal income, including possible investment income and trading profits, but it does not publish a figure for those earnings.

This is where scrutiny intensifies. The King can deduct income used for official duties before calculating voluntary income tax. That means money spent on royal business does not fall into the same taxable category as money used personally.

The Sovereign Grant is treated separately. It comes from the Treasury and supports official duties. It does not count as personal income for the King.

Tax and financial planning expert Shaun Moore told the BBC that the report gives a large tax figure and a large income figure, but not the detailed route between them.

Historian Anna Whitelock said the disclosure places the King publicly in the position of a very wealthy man, while also showing a monarchy trying to respond before criticism forces its hand.

James Chalmers, Keeper of the Privy Purse, defended the wider system, saying royal finances are structured in law and designed to let the monarch serve with independence, accountability and the long-term interests of the nation in mind.

For now, the King’s £12.9m payment has made history. It has not ended the argument over what royal tax transparency really means.