Meghan Markle’s wedding to Prince Harry captivated the world.
After all, it’s not often that you see a Hollywood celebrity marry into British royalty.
Even so, Meghan managed to continue making waves months after her wedding with her unique fashion choices, formidable work ethic, and reliance on close friends as informal advisers has upended the normal and traditional routines that the royal palace staff is used to.
While Meghan’s actions have shaken up normal Royal Family traditions, it’s just a matter of both parties getting used to them. Besides, she does have a warm relationship with the Queen.
However, there’s one other influence Meghan is bringing to the table that is not so welcome, through no fault of her own. Because Meghan is a US citizen, that means all her earnings are subject to the Internal Revenue Service. This extends to anyone else that she draws money from, such as her husband and, by extension, the Royal Family.
This opens up the Royal Family to a level of financial scrutiny that insiders are calling a “tax nightmare.” Even the Queen and Prince Charles could face a probe from the IRS as they also provide funding for the couple.
One palace aide said, “We’re looking at a level of financial exposure the Royal Family has never had to face before.”
Considering how determined the IRS is to chase down those they feel owe money to the US government, that can’t be good. The Royal Family has engaged the services of a team of US financial consultants to deal with the issue.
But the fact remains that while Meghan remains a US citizen, her earnings will still be under the jurisdiction of the IRS even if she lives full time in the UK. Meghan can even be taxed for the value of royal assets like Kensington Palace, where she currently lives unless she pays the rent herself.
Alistair Bambridge, a US tax specialist at Bambridge Accountants, said: “Of course this raises the tantalizing prospect of Uncle Sam getting a look behind the velvet curtain – and seeing the private finances of the Royal Family.
“Duchess or no duchess, when it comes to the IRS, Meghan is like every other American citizen. Each year she must file her tax return and pay any tax she owes to Washington.
“The US income tax system is citizenship-based, so as an American it doesn’t matter where in the world you live and work – your tax affairs are always Uncle Sam’s business.
“Clearly Meghan’s case is a unique one, as she may be taxed according to the rental value of a home she lives in for free – Kensington Palace. Working out the market rental value of a royal palace is not a task for the fainthearted.”
The Queen voluntarily pays UK income tax and capital gains tax. Since 1993, her income has become subject to tax, just like any other taxpayer. She is also subject to VAT.
The Queen’s income is provided by the government through the Sovereign Grant, the Privy Purse (the historical term for the Queen’s land and properties), and her personal investments. Experts estimated that as of 2017, the monarch generates £1.8billion yearly for the British economy through tourism, the media, and other businesses.
Maintenance of the Royal Family comes to around £292million per year or about £4.50 per Royal.
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