Paradise Papers: What is the Duchy of Lancaster and why did it choose to invest money offshore?

Last year, the Duchy delivered £19.2 million of income to the Queen on assets of £519 million. Photo: PA

To understand why the Queen has become involved in the ‘Paradise Papers’ story- you need to understand the Duchy of Lancaster which pays the Queen millions of pounds each year.

Firstly, the Monarch, even female ones, is always known as the Duke of Lancaster.

So, the current Duke is Queen Elizabeth II.

The Duchy of Lancaster dates back to 1399 when King Henry IV declared that the original Lancaster inheritance, including land and properties, should be held separately from other Crown property and descend through the Monarchy.

In other words, it privates an additional form of income for the Queen on top of the money she gets from the Sovereign Grant.

So what is the Duchy?

It’s a private estate of 18,000 hectares in England and Wales of agricultural and commercial properties plus a number of buildings in London near The Strand.

Last year, it delivered £19.2 million of income to the Queen on assets of £519 million.

The Queen pays tax on the income she gets from the Duchy.

The question raised by the leak of these papers today - is why the Duchy is choosing to invest some of its money offshore.

It isn’t a great amount - the Duchy says the Cayman Island funds, for example, account for only 0.3% of its total value.

But why would those in charge of the Duchy’s money choose to make decisions which have left The Queen with questions to answer over such a small proportion of its funds?

There is no suggestion they have done anything illegal - but money invested in this particular way has attracted criticism.

Graham Smith, from the anti-Monarchy group, Republic said: "The Queen is responsible for her investments, she should have instructed her advisers to ensure her money was invested ethically".