The Duke and Duchess of Sussex have said they will “work to become financially independent” as they step back from official royal duties. While that may sound like they plan to start earning a living, it is actually about gradually cutting down on the money they receive from the government via the sovereign grant.

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Prince Harry and Meghan say just 5% of their income currently comes from the sovereign grant, which is designed to cover the cost of performing official royal duties. The couple said the remaining 95% funding their official office receives is given to them by Prince Charles from income he earns from the Duchy of Cornwall estate.

The sovereign grant is paid directly from the Treasury to the Queen, who splits the money between the family. In the 2018-19 financial year the total grant was £82.2m, and is set to rise to £85.7m by 2020-21.

It is not known now much of the grant was paid to the Duke and Duchess, but some commentators have suggested that Princes William and Harry shared about £5m. The sovereign grant money is derived from the profits of the crown estate’s property portfolio, which was historically owned by the royal family. The estate takes in swathes of property and farmland across the country, including all of Regent Street in London.

The Duchy of Cornwall is distinct from the sovereign grant. The duchy, which extends to 54,632 hectares (135,000 acres) of land across 23 counties including just over 2% of the county of Cornwall, is an inherited asset passed down to the eldest son of the monarch. The income from the estate is paid directly to Prince Charles. The latest annual accounts showed the duchy had assets of £931m and a “distributable surplus” [the equivalent of profit] of £21.6m.

“The Duchy of Cornwall was established in 1337 to generate an income for the present and future Dukes of Cornwall,” the annual report stated. “Under the charter, The Duke of Cornwall is entitled to the annual revenue surplus generated by the Duchy estate. The income is used to fund the personal and professional expenditure of The Prince of Wales and The Duchess of Cornwall, The Duke and Duchess of Cambridge and The Duke and Duchess of Sussex – including staff, charitable work and public duties.”

The report does not say exactly how much of that money was paid to each family member. However, the accounts show that supporting the activities of the Sussexes, the Cambridges and Prince Charles cost £5.05m in 2018-19.

Prince Harry and Meghan will retain Frogmore cottage, their Grade-II listed home in Windsor, which was renovated last year at the cost of £2.4m paid for by the sovereign grant, so that they have a “place to call home” in the UK.

On their website, the couple suggest that the sovereign grant will continue to foot the bill for official overseas visits in support of the Queen. The couple’s tour of Commonwealth nations in the South Pacific in 2018 cost £81,000.

Security for the Sussexes will be provided by the government because, the couple said, they are classified as “internationally protected people” requiring armed security. The cost of their protection is unknown but the total annual bill for the entire royal family is estimated to be £100m a year. The cost of protecting the couple both in Canada in the UK is likely to increase the cost.

Under current rules, the pair are “prohibited from earning income in any form”. In the future, however, having relinquished their official positions, they could follow the lead of more minor royals in earning money from public speaking or writing books. Buckingham Palace has warned that “these are complicated issues that will take time to work through”.

As well as their annual income support payments, Princes William and Harry have private fortunes, having inherited a combined £13m from their mother, Princess Diana. They also collected an unknown sum from the late Queen Mother.