The funding of the monarchy is to be reduced from 25% to 12% of the Crown Estate’s net profits – but the Royal Household is still expected to benefit from a boost of nearly £80 million.
A change to the way the taxpayer-funded Sovereign Grant is calculated has been introduced following the Crown Estate’s new offshore wind deals, with its annual profits expected to soar above £1 billion.
Despite the new formula, the King will still receive almost £40 million extra a year in both 2025 and 2026, if projected profits prove correct.
It is understood the increase will be temporary and used to ensure the completion of the £369 million reservicing of Buckingham Palace – the major works to refurbish the royal residence which are due finish in 2027 – with the money part of that pre-agreed funding.
The changes came out of a review by the three Royal Trustees – Prime Minister Rishi Sunak, Chancellor Jeremy Hunt and Keeper of the Privy Purse Sir Michael Stevens – which was published on Thursday.
The King asked in January for the wind farm profits to be used for the wider public good.
The Treasury said, without the changes and if the rate remained at 25% of the profits, the Royal Household’s income would have been £24 million higher next year and £130 million higher in both 2025 and 2026.
Extra profits will be used to “fund vital public services, for the benefit of the nation”, it said.
The Sovereign Grant is based on funds two years in arrears.
The total Sovereign Grant for 2024/25 will remain flat at £86.3 million because of a caveat which means it cannot fall below current levels.
The Crown Estate profits in 2022-23 were £442.6 million, meaning had the 25% formula continued, the monarchy would have received £110.7 million in 2024/25.
At the new 12% formula, the monarchy would have received £53.1 million – but because it cannot be less than the previous year, it will remain at the current £86.3 million.
Predictions in the report set the expected Crown Estate profits in 2023-24 as £1.04 billion and 2024-25 as £1.05 billion, meaning the Sovereign Grant could be £124.8 million in 2025-26 and £126 million in 2026-27 – a jump of nearly £38.5 million and then £39.7 million, compared to the current rate.
If the 25% formula had continued, the monarchy would have received £260 million a year.
The Sovereign Grant will be recalculated when the Palace building works are finished, the Treasury said.
Mr Hunt said the British monarchy was a “source of immense national pride and constitutional strength, widely admired around the world”.
“For almost 300 years, Kings and Queens have surrendered the profits from The Crown Estate to the British people, and in return the Government has provided a fraction of that to properly support the King in undertaking his official duties,” he said.
“The new Sovereign Grant rate reflects the unexpected significant increase in The Crown Estate’s net profits from offshore wind developments, while providing enough funding for official business as well as essential property maintenance, including completing the 10-year reservicing of Buckingham Palace”.
Buckingham Palace declined to comment, saying it was a matter for the Treasury.