Prince William has been accused of benefiting from “extraordinarily murky” tax arrangements surrounding the Duchy of Cornwall.
Margaret Hodge, the Government's anti-corruption tsar and a Labour peer, questioned why the Duchy does not pay capital gains tax and said the current arrangements risk undermining trust in the monarchy.
She argued that the Prince of Wales, who inherited the Duchy in 2022, must decide whether it is a private estate or a public asset.
Ms Hodge said: "It is private when it suits him and public when it suits him.
"If it’s private he should be paying capital gains tax.
"If it’s public he should be transparent about the finances and we should have regard to the duchy in setting the sovereign grant."
The Duchy does not pay corporation or capital gains tax, though Prince William voluntarily pays income tax on its surplus.
In 2024-25, this amounted to £7.76 million.
Dan Neidle, a tax expert, challenged the exemption.
Mr Neidle said: "Everyone pays income tax on their income and capital gains tax on their capital gains, unless there is a specific exemption.
"The Duchy of Cornwall is not part of the Crown.
"HMRC should send a letter saying, 'We understand there’s been this past practice. It’s been going on a long time but having thought about it there’s no technical basis for it. From now on you’re paying tax.'"
The debate follows controversy over Prince William’s decision to sell the Bradninch Estate in Devon, part of the Duchy since the 14th century.
Tenants have claimed properties were overvalued and that their investments were not considered in the sale.
A spokesman for the Duchy said the prince is exempt from capital gains tax because the proceeds are legally required to be reinvested and are not for his personal use.
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He said: "We recognise that these are important and deeply personal decisions.
"Every tenant is being supported through the process on an individual basis, with access to practical guidance from the estate team, independent welfare and mental health support services and ongoing discussions about what is right for their circumstances."
Prince William has apologised for the handling of the sale and promised new valuations for tenants.
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