Now that the Royals are a hot subject, we put our heads together, dusted off our calculators, and found out how much the Royals really cost or contribute to the UK's tax system.
We've found out that for every 1 pound that the taxpayer spends on the Royals, the taxpayer gets back £7.
That is a fair spend of taxpayers money, to say the least - a 7 X return on investment.
Now let's dive in and see how we've calculated this sum.
There is a debate that the Royals cost the UK taxpayers £82.4 million per year, according to the Royal Household's financial report.
As we have 31.4 million people in the UK who pay taxes, that equates to £2.6 per person, per year.
Or this means that the cost of Royals, per taxpayer, is £0.2 every month.
Yes, the cost of Royals, per person, is 20 pence per month.
However, the Royal Family also contributes greatly to the country's economy through tourism, crown estate surplus, trade, and many other indirect factors.
According to a report by BrandFinance, the monarchs contribute £1.7 billion per year to the country's economy.
To keep it a fair calculation, we cannot state that £1.7 billion goes right back to the taxpayers, because it doesn't.
We need to calculate how much tax will result due to this increased £1.7 billion in the economy.
This is why we'll use the tax to GDP ratio of the United Kingdom, in our calculation.
Considering a 33.6% tax to GDP ratio, out of the Royals' contribution of £1.7 billion to the UK's economy, about £571 million goes back into the taxpayer's bucket, based on a 33.6% tax to GDP ratio.
Again, based on having 31.4 million taxpayers in the UK, this means that every person receives a net contribution from the Royals of £18.18 per year.
Or this means that every taxpayer gets £1.51 per month back from the Royals.
Based on the above calculations, the Royals give back to the taxpayers a NET £488.6 million per year. We get this result by extracting the cost to the taxpayers, of £82.4 million, from their contribution to the tax bucket, of £571 million.
This means, that every £1 that is being spent on the Monarchs will bring back to the taxpayers £7 - yes, that is correct, a 7 X return on investment.
So, despite constant claims on social media that taxpayers foot the bill for the Royal Family (which have only intensified since Harry and Meghan's bombshell interview), it turns out the Royal Family actually pay more for us than we do for them.
For every £1 you lob at Buckingham Palace, you make a NET profit of £6. That's pretty decent, as far as investments go.
In order to calculate the amount of tax revenue as a result of the Royals' contribution, we need to take into consideration the UK's tax to GDP ratio.
The tax to GDP ratio is the total percentage of tax that is being paid per total GDP of the country.
In order to calculate the tax to GDP ratio of the UK, we need 2 things:
- The yearly GDP of the UK - £2.17 Trillion, for 2019
- The total yearly tax revenue collected by HMRC - £731 billion, for 2019
By looking at the 2 sums above, we can see that 731 billion is about 33.6% of £2.17 trillion
This means, that the UK's tax to GDP ratio is 33.6%.
Let's say, that for example, the UK's economy grew by £100 billion.
In that case, we would be able to mathematically predict the approximate tax revenue: all we need to do is to calculate what 33.6% of the £100 billion is - that sum will be the estimated tax receipt. In this case scenario, the tax receipt would be £33.6 billion.