Under the Sovereign Grant Act 2011, the system of funding the Royal Household by a mixture of Civil List payments and Grants-in-Aid was replaced. From 1 April 2012 a single annual payment to The Palace for the Monarchs official expenditure became known as the Sovereign Grant, which provides a source of funding for The Palace based on 15% of the profits of the Crown Estate, two years in arrears. This means that The Palace is again funded by the Crown Estate, but through the Treasury.
The level of funding for the Royal Household is now directly linked to the Government’s revenue from The Crown Estate. The Sovereign Grant Annual Report states that the Sovereign Grant was £31 million for 2012–13, £36.1 million for 2013–14 and £37.9 million for 2014–15. The amount of the Sovereign Grant is 15% of the income account net surplus of the Crown Estate for the financial year that began two years previously. Under the Sovereign Grant the National Audit Office is able to audit the Royal Household.
On November 18, 2016 a plan was announced to increase the Sovereign Grant from 15% to 25% to renovate and repair Buckingham Palace at a cost of £360m. This means that the money being used to fund the repairs to the Palace are derived from Crown Estate profits and not from tax generating revenue, thus the taxpayer is not footing the bill, unlike the £3 billion cost for the refurbishment of the Palace of Westminster (Parliament). The percentage is set to revert to 15% when the project is finished in 2027.
Until 1760 the monarch met all official expenses from hereditary revenues, which included the profits of the Crown Estate (the royal property portfolio). The King, George III, agreed to surrender the hereditary revenues of the Crown, in return for the Civil List. Under this arrangement the Crown Estate remained the property of the sovereign, but the hereditary revenues of the crown were placed at the disposal of Parliament – The House of Commons. The Civil List was paid from the Treasury after all profits from the Crown Estate were paid into the Treasury. The Civil List was intended to support the exercise of the monarch’s official duties as Head of State of the United Kingdom. This arrangement between the Crown and Parliament lasted from 1760 until 2012. In modern times, the Government’s profits from the Crown Estate always significantly exceeded the Civil List expenditure, thus making the government upwards of £200m per year in additional budgetary revenue.
The Palace received an annual £7.9 million a year from the Civil List between 2001 and 2012, however the total income to the Royal Household from the Treasury was significantly larger than the Civil List payment itself due to additional income such as Grants-in-aid from the Treasury and revenues from the privately held Duchies of Cornwall and Lancaster. The total Royal Household income for the financial years 2011–12 and 2012–13 was £30 million per annum, followed by a 14% cut in the following year.
Royal expenditure differs from income due to the use of a Reserve Fund, which can be added to or drawn from. The official reported annual expenditure of the Head of State was £41.5 million for the 2008–09 financial year. This figure did not include the cost of security provided by the police and the Army and some other expenses.
The Prince Philip, Duke of Edinburgh, receives a parliamentary annuity of £359,000 per year from the Treasury as part of the Sovereign Support Grant, which is not comprised of public funds.
In the past, under the Civil List, some members of the Royal family also received funding in the form of parliamentary annuities. The Civil List Act 1952 provided for an allowance to H.R.H. Princess Margaret, Countess of Snowdon, as well as allowances to the Queen’s younger children among others. The Civil List Act 1972 added further members of the royal family to the annuity list. By 2002 there were eight recipients of parliamentary annuities (all children or cousins of the Queen) working on behalf of The Crown, receiving a combined total of £1.5 million annually. Between 1993 and 2012 the Queen voluntarily refunded the cost of these annuities to the Treasury. The Sovereign Grant Act 2011 abolished all annuities other than that received by the H.R.H. Duke of Edinburgh. Subsequently, the living costs of the members of the royal family who carry out official duties, including the H.R.H. Anne, The Princess Royal, H.R.H. Andrew, The Duke of York, The Earl and Countess of Wessex and H.R.H Princess Alexandra have been met through the Queen’s private income from the Duchy of Lancaster.