Meghan Markle’s US citizenship sparks tax troubles for royals

Harry and Meghan’s sizeable fortune is under threat because of a legal loophole described as the royal family’s “worst nightmare”.

Meghan Markle’s US citizenship could end up costing the royal family a fortune.

The new Duchess of Sussex is still a US citizen, despite marrying Prince Harry earlier this year and formally applying to become a British subject — a process which could take several years to come into effect.

As a result, she still has to pay tax in America on any income earned or allowances received, British media reports.

• Suburbs bucking grim house price trend

• City making homeowners rich

• ‘Risky move’ a million-dollar business

That means all royal proceeds enjoyed by Meghan, 37, could be on the taxman’s radar, including gifts, homes and even her clothes — in addition to her own $AU6.8 million fortune earned from her acting career.

And as her spouse, it also means Prince Harry’s own income could be affected — including his $AU35 million trust fund which was set up by Princess Diana and the Queen Mother.

Prince Harry’s trust fund, which is now “available” to his wife, could be on the American taxman’s radar. Picture: Leon Neal/Getty Images

Prince Harry, 34, earns around $AU526,800 per year from that inheritance, and already pays annual income tax on that cash in the UK.

However, as that money is now also available to his wife Meghan, it could count towards her income too.

Prince Charles and the Queen could also both be caught up in the tax troubles, as they both provide financial support to the young royals as well.

Queen Elizabeth and Prince Charles may also have to pay tax to the American government. Picture: Peter Nicholls/Pool/AFP

Royal staff told theSunday Express the situation was unprecedented.

“We’re looking at a level of financial exposure the royal family has never had to face before,” the aides said.

“It’s the royal household’s worst nightmare … Everything has to be declared.

“That means a level of fiscal openness and scrutiny the royal family are not used to.

“There is a very comfortable relationship between the Palace and Her Majesty’s Revenue and Custom (HMRC) where the royal family volunteers to pay some tax and the taxman is very grateful.”

The “nightmare” loophole means some of Prince Harry’s inheritance from mum Princess Diana could be lost. Picture: AP Photo/Pool

According to the UK media, the royal couple may have to declare more than just cash, with jewellery, designer clothes and even their home in Kensington Palace likely to come under tax scrutiny.

The Mirror reports the royal family will hire several American tax experts to help them navigate the situation and prepare Meghan’s tax returns.

Kensington Palace has previously announced Meghan was going through the “normal visa process” to become a British citizen via a Leave to Remain visa, which allows a holder to stay in the UK indefinitely with no limit on their length of stay, employment or educational opportunities.

The palace is reportedly hiring a team of experts to help navigate the problems caused by Meghan’s US citizenship. Picture: Phil Noble — Pool/Getty Images

Meghan, who is expecting her first child early next year, has embraced her new royal role with gusto since tying the knot with Prince Harry in a lavish, star-studded ceremony at Windsor Castle in May.

Earlier today, it was claimed she “bombards” royal aides with texts from 5am daily as she discusses ideas about her role with staffers.

And earlier this month The Sun reported “difficult” Meghan and Kate had clashed over the treatment of staff, with the former Suits star allegedly holding her employees to “very high standards”.

Continue the conversation @carey_alexis | [e-mail]