Biggest rise ever in Charles' income and spending - but only a modest rise in one's tax bill

Prince Charles earned more last year than ever before and spent more on staff, travel and entertaining. Yet he still received a substantial pay rise from the taxpayer.

The heir to the throne saw his personal income from the Duchy of Cornwall soar to a record £15.1million - up by £1.1million on the previous year.

This was boosted by more than £ 2million in Government grants, a 28 per cent rise.

He uses this money to fund Clarence House, his London office and official residence plus all his travel by air and rail when on official business.

Like his mother the Queen, the prince is not obliged to pay tax but has agreed to do so at a rate of 40 per cent.

This year he paid £3.4million, up £138,000 on the previous year.

However, his accountants wrote off £7.2million, or 48 per cent of his income from the Duchy of Cornwall, against tax.

This meant the actual amount of tax he paid as a proportion of his gross income fell to 22.6 per cent, effectively making the prince a basic rate taxpayer.

Charles offset £4.8million which was spent on the 106 members of staff who make up his working household - including his six chefs and kitchen staff, butlers and valets - as well as £391,000 on official receptions.

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Also included was £41,000 spent on his private gardens at Highgrove in Gloucestershire which, he argued, are primarily used to entertain members of the public.

Details of the prince's finances were revealed yesterday with the publication of his annual report.

It revealed that the prince helped to raise more than £119million for good causes last year alone, and boasted that Charles, the Duchess of Cornwall and princes William and Harry cost just 4p for every man, woman and child in the country - up half a pence on last year.

His decision to open up his books is entirely voluntary and was praised yesterday by several senior accountants as 'refreshingly transparent'.

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Mike Warburton, senior tax partner at Grant Thornton, described the prince's increase in annual income as ' substantial' but added: 'It is clear he has a very talented team working to maximise his investments and an even more talented team of accountants.'

The books reveal that, despite announcing his intention last year to cut down on gas-guzzling transport, Charles spent £1.4million of taxpayers' money on air and rail travel in 2006-2007, up 29 per cent.

After tax, the prince was left with £2.6million - up 20 per cent - for 'personal expenditure'.

It is understood that the majority of this goes towards even more staff - another 30 in all - and on running Highgrove and Birkhall, the Scottish estate that he inherited from the Queen Mother, as well as his organic farm.

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MP Ian Davidson, of the Public Accounts Committee, warned that the committee would continue to press the Duchy to open up its books 'fully and comprehensively', a request it has so far refused arguing that it is completely unnecessary.

He pointed out that the Duchy was already exempt from paying either capital gains or corporation tax 'so it is hardly a magnanimous gesture for the Prince of Wales to pay income tax like the rest of us'. He added: 'We will continue to investigate all unwarranted tax allowances or breaks on behalf of the general public, including extravagant funding of travel and accommodation costs.

'Only city slickers have seen these kind of pay rises and we have to ask whether it is a price we can afford.'

But Sir Michael Peat, the prince's private secretary, yesterday insisted his books were all above board.

'The Inland Revenue scrutinise His Royal Highness's accounts with as much vigour as the next man, even more so I would think,' he said.

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Asked to explain the prince's increase in spending, Sir Michael added: 'His Royal Highness is an increasingly busy man who is very passionate about this country and everyone in it.

'He really wants to make a difference and is willing to work tirelessly to make this country a more harmonious and civilised place in which to live.

'Let us also not forget that the increasingly frequent trips he makes abroad are done at the request of the Foreign and Commonwealth Office and on behalf on the nation. His recent visits to Pakistan and the Gulf region were of huge importance to the Government.

'In the scheme of things I would say that we are extremely lean.'