This means that they will have a personal allowance of pounds 3,445, the first slices of income taxed at 20 and 25 per cent and a top rate of 40 per cent. They will pay capital gains tax at 40 per cent on asset sales after inflation has been taken into account, and inheritance tax at 40 per cent after an allowance of pounds 140,000.
One obvious difference, however, is that wealth that passes from sovereign to sovereign will be exempt from tax. This, in effect, means that the Queen need pay no inheritance tax at all under current rules.
Gifts are tax free as long as the giver lives for seven years after the hand-over. So the Queen could leave her successor all her private worldly goods, and they could then be widely distributed among the family beyond the clutches of the Inland Revenue as long as there was no untimely death.
Cathy Gordon, tax partner at the accountants Coopers & Lybrand, said it was significant that the Prime Minister referred to the salami-slicing of wealth by this tax which leaves everyone else 'taxed to the bone'.
The Queen's taxes are to be levied on her personal wealth, and the income from the Duchy of Lancaster, the Privy Purse, used for personal purposes. But against this income she will be able to off-set the pounds 879,000 she will repay the Government to reimburse the Civil List payments to five members of the Royal Family. The Queen, Duke of Edinburgh and the Queen Mother will continue to draw their Civil List payments.
Many other expenses will also come outside the tax net. Uniforms, but not other clothing, will be tax deductible. 'Donations, cups, prizes, flowers and presents given in an official capacity', the cost of running the Queen's two private residences, Balmoral and Sandringham, relating to their official use, and the cost of accountancy, legal and investment advice, which will no doubt mush room once the Queen has to get involved with the Inland Revenue, are all tax-deductible.
The royal train, the royal yacht and the Queen's Flight, because they are controlled and financed by officials, will not impose on the Queen's taxes. The employee or director who drives a company car, or is chauffeur driven in one, is taxed dearly if there is any suspicion that the vehicle has been used for even the shortest private journey, even to and from work.
The Queen's share portfolio will be subject to Capital Gains Tax. Her advisers will surely be 'bed and breakfasting' (selling and repurchasing) them before the end of the tax year in April. This will establish a new buying price so that future gains will be calculated from this base, rather than the real, lower, price at which they were bought.
This is a one-off opportunity as in future years, she will be subject to the same limit as everyone else.
In the past she has been able to reclaim the basic rate tax automatically deducted from dividend payments on shares. But in future she will be paying extra tax as she will be a higher rate taxpayer.
The Lord Chamberlain, Lord Airlie, has pointed out that the Queen and Prince of Wales already pay VAT and will pay council tax.
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