Royal engagement romantic ring gesture could produce big capital gains tax bill

November 22, 2010

The world is abuzz over the upcoming wedding of England's Prince William and Kate Middleton.


Prince-william-kate-middleton-sapphire-engagement-ringBut while most romantics are simply focusing on pedestrian issues such as when and where the big event will occur — we might find out today whether vows will be exchanged in April or July and if the ceremony will be at Westminster Abbey! — tax geeks are pondering the implications of William's grand engagement ring gesture.

The young prince gave his betrothed the sapphire and diamond ring that his father, Prince Charles, gave to his mother, Princess Diana, upon their engagement in 1981. William inherited the ring from his late mother.

But according to British tax law, William's gift could end up costing him £28,000, or $44,667 in U.S. dollars.

"If it is was worth about £150,000 for probate and about £250,000 now, Prince William could be facing a £28,000 capital gains tax bill, which would be payable in January 2012," Mike Truman, editor of Taxation Magazine, told the Express newspaper.

In case you're an American reader and are a bit confused, that's because the laws for British capital gains taxes and U.S. capital gains taxes are different.

In the United States, you generally have to sell something at a profit to face capital gains taxes. In Great Britain, however, taxpayers are subject to that country's capital gains taxes when they sell or "dispose of" an asset.

And disposing of an asset under British tax law includes not only selling an item that has increased in value, but also giving it away as a gift or transferring it to someone else.

Thanks a lot, HM Revenue & Customs, for being such royal wedding buzz killers!

Of course, said Truman, William could avoid the 28 percent British capital gains tax by making the gift of the ring conditional on he and Kate actually saying "I do."

If they don't go through with the nuptials and Kate returns the ring to William, then the U.K. capital gains tax bill would simply go away, along with the romantic dreams of lovers of young lovers everywhere.

Hat tip: taxgirl

Related posts:

Want to tell your friends about this blog post? Click the Tweet This or Digg This buttons below or use the Share This icon to spread the word via e-mail, Facebook and other popular applications. Thanks!

Share:

The More Tax Posts tab at the top of this page will take you to, well, more tax posts. You also can search below for a tax topic. 

Latest Posts
The latest Dirty Dozen tax scam list is familiar because too many are still falling for the schemes

March 5, 2026

Tax filing season is also peak time for tax scams. Be on the lookout for…

Read More
Hello Tax Season 2026

Happy New Tax Year! Are you ready to file your 2025 tax return? I know, too early to ask. But Tax Day 2026 will be here before we realize it. The Internal Revenue Service deadline to file and pay any tax we owe is the regular April 15 date this year. It’s also Tax Day for most of the states that collect income taxes from their residents, which is most of the states! If that seems too far away right now, don’t worry. As is the case every tax season, the ol’ blog’s tips and other tax reminders should help all of us meet our state and federal responsibilities. Procrastinators also will want to keep an eye on the countdown clock just below. It tracks how much time we have until April’s Tax Day, just in case we put off our annual tax task until the absolutely final hours and decide we need to instead get an extension request into the IRS by that date. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

Comments
Leave the first comment