King Charles III to receive bumper pay rise after a shake-up of the British royal family’s finances

LONDON — The amount of money given to the British royal family by the U.K. government is projected to "increase significantly" in the coming years, according to the latest review of the annual Sovereign Grant.

Treasury officials said Thursday that the proportion of the Crown Estate's profits paid to the royals will be reduced to 12% from next year, down from the current rate of 25%.

Despite the percentage cut, an unexpected surge in profits means the royal family is poised to receive more money than in previous years.

The amount awarded as a sovereign grant is tied to the profits generated by the crown estate, which covers all of the hereditary assets belonging to the monarch, including large portions of land and vast swathes of British coastline and seabed. 

The portfolio is worth a total of £16 billion ($20.5 billion), according to the crown estate, and generated "substantial additional income" from the offshore wind facilities owned by the royal family.

The sovereign grant, which is based on profits generated two years before the financial year in question, was worth £86.3 million this year — unchanged from the year before.

The royal family is forecast to generate profits of around £1.04 billion from the crown estate in 2023 to 2024 and £1.05 billion in 2024 to 2025, according to the latest report of the royal trustees on the sovereign grant.

At the new 12% formula, this means the monarchy could receive £124.8 million in 2025 to 2026 and £126 million the following year.

The "royal trustees" responsible for calculating how much money the royal family should receive includes British Prime Minister Rishi Sunak and Finance Minister Jeremy Hunt.

The trustees are "satisfied that this expected step up in the Grant level is appropriate," the review said, after the funding had remained at a stable level in previous years.

Maintaining the grant at its former level has "constrained" maintenance work needed on the royal properties, the review said.

The trustees added that the previous 25% figure was "no longer appropriate" given that the royal family's net revenue profits could be over £1 billion, meaning a 25% cut would be "significantly in excess of the Household's needs."

The grant review also outlined that the sovereign grant, and how it is calculated, will be assessed ahead of the financial year 2027/28, but thanks to the so-called "golden ratchet" clause implemented in 2011, funding for the royal family can increase as profits rise, but cannot be lower than in the previous year.

The grant review also outlines how the money will be used, including maintenance of royal residence, employment costs for household staff and royal travel for official engagements, both in the U.K. and overseas.

The royal family has officially received funding from the British government since 1760, and this was consolidated into the sovereign grant in 2012.

Organizations critical of the royal family have spoken out against the increased funding, as well as the way in which the U.K. Treasury presented the information.

"The claim that the Sovereign Grant will be £24m lower is grossly misleading," Graham Smith, CEO of Republic, an anti-monarchy campaign group, said in a press release.

"The grant will remain the same while royal spending will go up as it does most years … The government and palace are misleading the public," the group added.

Neither Buckingham Palace nor the Treasury immediately responded to CNBC's request for comment.

— CNBC's Sam Meredith and Ruxandra Iordache contributed to this report.