Royal aides and Government officials have drawn up a range of scenarios setting out the ‘stark implications’ faced by Harry and Meghan if they abandon or dramatically scale back their royal duties – including a major tax trap.
In what sources described as a ‘reality check moment’, Harry will travel to Sandringham for a showdown with the Queen, Prince Charles and Prince William. Meghan is expected to join by phone from Canada, where she is caring for their eight-month-old son, Archie.
A senior source said a solution that is ‘compatible with taxpayers, compatible with reality and compatible with the Queen’ was being sought.
But the mood is likely to be tense. The Mail on Sunday understands that anger over Harry and Meghan’s defiance of an order not to go public with their so-called ‘abdication’ plan has been compounded by the suggestion – denied by Palace sources – that the couple told Canadian Prime Minister Justin Trudeau about their move before the Queen.
Meanwhile, Meghan has been telling friends that a move to North America will be a welcome relief from her ‘toxic’ life in Britain.
At tomorrow’s meeting, Prince Harry will be handed documents, compiled following discussions with HMRC and the Canadian tax authority, that will set out in detail the financial penalties for a range of scenarios.
These include a so-called hard Megxit involving a permanent move to North America and a soft Megxit in which the couple split their time between Britain and overseas and retain full, active Royal roles.
Harry will be told that he would face a potential ‘double tax’ on any commercial income and a large bill for Frogmore Cottage, his home in Windsor, if he and Meghan decide to ditch their royal duties and relocate abroad.
The bill could run into millions of pounds. Canada requires residents – anyone who spends 183 days or more in the country – and some property owners to pay income tax on their global earnings. Similar rules apply in the UK, but the limit is 90 days.
Who will be at the crisis summit?
The Queen and her private secretary Sir Edward Young
The Queen is head of state and head of the royal family, and will ultimately have the final say in the matter.
As the nation’s longest-reigning monarch, her experience and knowledge on the workings of the institution of the monarchy are unrivalled.
Through the decades, the Queen has weathered the Windsors’ many storms and is a symbol of stability both for the nation and within the royal family.
Although left hurt by Harry and Meghan’s actions, the Queen is not given to rash decisions, and will be approaching the problem in a calm and pragmatic way.
The Prince of Wales and his principal private secretary Clive Alderton
Heir to the throne, Charles is the future king and currently bankrolls Harry and Meghan’s public duties through his £21 million-a-year Duchy of Cornwall income.
The prince is a caring, sensitive soul, and is said to be furious at how Harry and Meghan have handled the situation.
He is committed to his royal duty, but will also want his impetuous youngest son, who endured the loss of his mother Diana, Princess of Wales, when he was only 12, and Meghan to be happy.
The Duke of Cambridge and his private secretary Simon Case
When Harry turned 21, he described William as the one person on the planet to whom he could talk to about everything.
But talk of a falling out between the brothers, with William said to have urged his brother to not rush into marrying Meghan, has changed their once-close relationship.
William, who was said to be “incandescent with rage” at the Sussexes’ actions, is a future king, and his position within the royal family is vastly different from sixth-in-line Harry, who has moved steadily down the line of succession and has to carve out his own role.
Mr Case was has been a leading civil servant previously tasked with trying to solve the border issue in Northern Ireland and Ireland during Brexit discussions.
The Duke of Sussex and the couple’s relatively new private secretary Fiona Mcilwham
Harry has always been a favourite with royal fans, who have never forgotten the heart-rending image of the 12-year-old prince walking behind his mother’s coffin.
In his younger days, he was a royal liability – dabbling with cannabis, dressing up as a Nazi and brawling with a paparazzi photographer – before he pulled off a charm offensive as he carried out overseas tours on behalf of the Queen.
It would mean that Harry might have to give up his UK residency or limit his time in Canada, else risk being double-taxed on any commercial income, paying in both countries.
Meghan, who is an American citizen, already has to pay tax in the US on any global earnings regardless of where she lives.
The couple may also face hefty charges on any funding they get from Prince Charles’s Duchy of Cornwall estate and could have to pay rent at commercial levels for Frogmore Cottage, which underwent a taxpayer-funded £2.4 million refurbishment before the couple moved in. The couple currently receive annual funding, also of about £2.4 million, mostly from Charles.
There is also genuine concern about the mental fragility of the couple – particularly Harry – so aides are doing all they can to try to ease any transition. They understood to have devised plans to offer special arrangements to reduce the couple’s tax liability if they agree to a fuller royal role. A royal source last night told The Mail on Sunday: ‘This meeting will give the Duke and Duchess an unvarnished look at the full implications of their choices.
‘Lots of assumptions have been made about how things can work, but this will be the time for workable decisions to be made in the full knowledge of the consequences and implications, however unappealing.’
Another Palace source said: ‘There are a range of possibilities to review. Next steps will be agreed at the meeting. The request for this to be resolved at pace is still Her Majesty’s wish. The aim remains days not weeks.’
Wayne Bewick, an expert on the Canadian tax system for the firm Trowbridge, said: ‘Harry’s duties for the Crown could be considered employment income for Canadian purposes.’
In addition to discussion of the Sussex finances, the Sandringham summit will discuss any potential new role for Harry. He is already President of the Queen’s Commonwealth Trust, which focuses on projects involving children, but one option might be to extend that role to make it easier to spend time in Canada.
In a day of dramatic developments:
- Donald Trump described the ‘Megxit’ battle as ‘sad’ and called the Queen a ‘great woman’;
- Meghan gave the media on Vancouver Island the slip last week by taking a budget flight instead of a private jet as they expected;
- The Queen was seen driving herself to a shooting party on the 20,000 acre Sandringham estate;
- Home Secretary Priti Patel and Security Minister Brandon Lewis were understood to be pushing for Harry and Meghan to retain royal security regardless of their future status;
- A poll for The Mail on Sunday found a generational divide with millennials supportive of the couple’s decision to step back from royal duties, but the opposite true of older baby boomers;
- Almost two-thirds of Canadians said they would welcome the appointment of Prince Harry as the country’s Governor-General.
There was no sign of Meghan yesterday at the £11 million mansion on Vancouver Island where she and Harry finalised their plan to scale back their royal duties over the New Year. But in a sign of the couple’s wish to spend considerable time in North America, they have moved their pet dogs to the property.
Despite the crisis, Palace sources say Harry will honour his commitment to host the draw for the 2021 Rugby League World Cup at Buckingham Palace on Thursday after which he is expected to fly to Canada to be reunited with his wife and son.
Inside high-stakes negotiations at Sandringham: Prince Harry and Meghan Markle will be offered a compromise ‘Commonwealth role’ as courtiers desperately search for a face-saving solution to Megxit – and one aide warns ‘I’ve never seen the monarchy in such a bad state’
By Kate Mansey, Deputy Features Editor for the Mail On Sunday
Sandringham House, near the coast in rural Norfolk, is normally a private sanctuary for the Queen and Prince Philip, a place for family gatherings where they can escape the endless formalities of London and Windsor.
Since Wednesday, however, this Royal retreat has found itself at the heart of the crisis enveloping the Duke and Duchess of Sussex following their shock decision to step back from their official duties and spend more time in North America.
Palace sources say the Queen has demanded a solution be found ‘at pace’ – a sign of real concern in an institution that prefers to operate at glacial speed. But then, as a well-placed source put it: ‘I have never seen the monarchy in such a bad state.’