ARCHIE HARRISON MOUNTBATTEN-WINDSOR was less than a year old when he moved to the US with his parents Prince Harry and Meghan Markle but he could benefit financially from their decision to leave the Royal Family behind.
For example, in the UK inheritance tax is at a rate of 40 percent with a tax-free allowance of only £325,000. This means that when Harry inherited money from Diana, a huge chunk of it went to HMRC, and it will also when he inherits money from Charles. In the US, estate tax is also at 40 percent, but with a tax-free allowance of a whopping $11,580,000 (£8,965,000).
However, this tax-exempt money can also be given to the recipient during the lifetime of the bequeather.
In both countries, spouses are exempt from paying any inheritance tax.
If Archie were inheriting from Meghan, a US citizen, he would automatically qualify for the $11,580,000 (£8,965,000) tax exemption.
However, if he was inheriting from his father, for Harry to qualify for this tax exemption he would need to be a US-domicile, meaning he pays taxes in the US.
A huge chunk of Harry’s inheritance from Diana went to HMRC (Image: GETTY)
He would become a US person for tax purposes either by being sponsored for a green card by Meghan, or by coming in on a visa, staying in the US long enough to pass the substantial presence test, and not overcoming that with a tie-breaker position under a tax treaty such as the US-UK tax treaty.
This estate tax exemption, called Unified Credit, includes all money gifted during a lifetime and upon death.
In addition to this exemption, Harry would be able to give Archie an extra yearly sum of tax-free money.
In the UK, you are allowed to give just £3,000 of gifts away per year in the seven years before you die ‒ everything above that is subject to inheritance tax.
Prince Harry and Meghan Markle moved to the US in March (Image: GETTY)
However, everything given before those seven years is completely tax free.
Meanwhile, in the US, you are allowed to give $15,000 (£11,600) per person per year throughout your life.
Tax and immigration expert David Lesperance told Express.co.uk: “The bottom-line is that Harry and Meghan’s potential tax liabilities, both while they are living and when they die vary enormously depending upon their actions.
“This is where multi-jurisdictional expert advice is mission critical and pays for itself many times over.”
Meghan and Archie (left) and the whole family (right) (Image: The Duke of Sussex / GETTY)
What’s more, Archie may well benefit financially from his parents leaving the Royal Family, because it gives them a unique opportunity to earn their own money.
As full-time royals, they spent their whole time doing charitable work and engagements on behalf of the Royal Family.
Now they have left that life behind and are living in California, they are free to pursue their own commercial interests.
With the cache of their royal background, and the esteem they are held in around the world, they will be able to pursue a wide range of opportunities that will likely be hugely financially profitable for them.
For example, they have recently signed a multi-year deal with Netflix, believed to be worth around $150,000 (£116,000) a huge figure to have secured just months after stepping down as senior royals, and during a pandemic.
They are also expected to carry out work with their non-profit Archewell, due to be launched next year, and have signed up to the Harry Walker Agency, a public speaking agency that boasts clients like Barack and Michelle Obama, and Bill and Hillary Clinton.
It is believed the Obamas and Clintons earn up to £300,000 per speech, meaning Meghan and Harry could really cash in on this opportunity in the future.
Of course, the family will now have to make their own way too, instead of taking money from the privy purse and Duchy of Cornwall.
They will need to pay for their own security ‒ a vast expense year on year ‒ as well as the mortgage on their house and their luxurious lifestyle.
That said, they have a truly unique opportunity to make unlimited amounts of money, with which they will be able to spoil their son as he grows up, gift him as an adult and leave him when they die.
Source: EXPRESS CO UK