(b) The monarch's sources of income include:
Civil List:
A sum of money voted for annually by Parliament to pay for the Queen's duties as Head of State and head of the Commonwealth and for the royal household.
This income in not taxable. Other members of the Royal family are included on the Civil list, although Prince Charles gets all of his income from the revenues of the Duchy of Cornwall (famous for its biscuits etc sold under the brand Duchy Originals). He voluntarily pays tax on this.
The Queen, since April 1993, has refunded part of the Civil List money to parliament, using her personal pot of money, the Privy Purse, which will be discussed later.
In broad terms, the Civil List funds the following expenses for both the reigning monarch and his or her spouse:
around 70 per cent pays the salaries of the 645 servants, butlers, and other employees of the Royal Household;
most of the remaining 30 per cent covers the costs of royal garden parties (attended by some 48,000 people each year) and hospitality during state visits.
Grants-in-aid:
Money granted by Parliament to pay for the upkeep of the inhabited royal palaces owned by the state, such as Windsor Castle, and transport for official duties.
The cash comes respectively from the budgets of the Department of Culture, Media and Sport (DCMS) and the Department of Transport, and is not taxable (DfT).
For example, the DCMS pay £15.3m a year (fixed until at least 2011), the DFT paid £6.2m in 2007 – 2008.
Privy Purse:
The income of the Duchy of Lancaster, used mainly to fund other members of the Royal Family. Some of the money is handed over by the Queen to reimburse some of their civil list payments. It is taxable, after some deductions for official purposes.
Personal Income:
The Queen's private resources for non-official activities. Legally untaxable, but the Queen now voluntarily pays some income tax, at a rate privately agreed with the Treasury.
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