The Duke and Duchess of Sussex’s £2.4 million reimbursement of the taxpayer for renovating Frogmore Cottage also included more than 18 months’ rent, royal accounts have revealed.

Critics had urged Harry and Meghan to pay back the millions spent refurbishing the property after they stepped down as working royals for financial and personal freedom and moved to the US early in 2020.

It was thought the substantial sum covered just the updating of the period home close to Windsor Castle, but the annual report on royal finances appears to indicate that it included rental costs as well.

A senior royal source said: “The Duke and Duchess of Sussex have paid £2.4 million and we’re satisfied that, on the basis of that payment, it satisfies all their current obligations.”

Details of an investigation into claims of bullying made against Meghan were expected to be included in the report but were not, and the source said the cost of the ongoing independent inquiry by a law firm is being met privately.

It is likely that a senior member of the royal family is paying the bill, but it is unclear when or if the privately funded report will be published.

For the first time Buckingham Palace has published figures on its ethnic minority staff, revealing that 8.5% of its employees are designated under this group compared with a target of 10% by 2022.

The palace admitted it “must do more” in terms of diversity, and the decision to move to greater transparency comes after Harry and Meghan accused an unknown member of the royal family of making a racist comment about their son, Archie, before he was born.

Accounts for the Sovereign Grant show the monarchy cost the taxpayer £87.5 million during 2020/21 – an increase of £18.1 million on the previous financial year.

With royal activity curtailed by the pandemic, most of the major expenditure areas have fallen, with payroll down £300,000 to £24.1 million and travel dropping more than £2 million to £3.2 million, but property maintenance soared by £11.2 million to £49.5 million as the 10-year project to renovate Buckingham Palace continued.

The Sovereign Grant increased £3.5 million to £85.9 million during 2020/21 – a core element of £51.5 million funds the Queen’s official duties and her household, and an additional £34.4 million pays for ongoing reservicing costs for the palace.

Harry and Meghan paid rent for the five months up to May last year, the report stated, and, after moving to America and signing a lucrative deal with Netflix, later paid the £2.4 million refurbishment bill.

The large sum also appears to cover a 22-month rental period – from June 2020 until March 2022 when the couple’s annual licence to occupy their private UK home is up for renewal.

The source said: “The Duke and Duchess of Sussex have paid £2.4 million, which covers the rental income in 2020/21, rental income in 2021/22… So all of the payments are reflected in the accounts.”

In the 2018/19 royal financial report the work to renovate Frogmore Cottage was listed as costing £2.4 million, with the document adding: “The scheme consisted of the reconfiguration and full refurbishment of five residential units in poor condition to create the official residence for the Duke and Duchess of Sussex and their family.

“The works started on site in November 2018 and were substantially completed by the end of March 2019.”

A spokesperson for the Sussexes said: “The duke made a substantial contribution to the Sovereign Grant last year to support necessary and existing refurbishments to Frogmore Cottage, which specifically included essential structural updates to the building.

“As part of this agreement, all tenant obligations are being met. The duke and duchess continue to operate with no money being drawn from the UK taxpayer.”

Harry and Meghan, who recently added baby daughter Lili to their family, now live in the exclusive community of Montecito in Santa Barbara after buying a property reportedly worth £11 million.

Sir Michael Stevens, Keeper of the Privy Purse, said: “In the year covered by this report, we actually spent more than our grant and the supplementary income we earned, with total net expenditure of £87.5 million, a 26% increase on the previous year.

“This was largely driven by a significant increase in the reservicing spend from £21.2 million to £38.8 million, an 83% increase on the year.”

The overspend of £2.3 million was met from funds drawn from the Sovereign Grant reserve.

The £369 million reservicing programme is updating the electrical cabling, plumbing and heating at Buckingham Palace over 10 years and is running to time and budget.

Income supplementing the Sovereign Grant fell 53% to £9.4 million largely reflecting the impact of Covid-19 on the ability of Royal Collection Trust to open royal palaces for visitors.

Sir Michael said: “As we said we would, we tightened our belts, we cut costs across all areas and managed to deliver savings to cover this anticipated reduction in supplementary income.

“These cost reductions did not involve job losses but did come from all areas including the pay and recruitment freeze we spoke about, general reductions in the areas of travel, housekeeping and IT and a reduction in some property backlog maintenance.”

Graham Smith, chief executive officer of the organisation Republic – which campaigns for an elected head of state, said:” Once again the Sovereign Grant goes up, once again the royals cost the taxpayer more year on year while the country faces unprecedented pressures on public spending.”

He added: “Of course the real cost of the royals is closer to £345 million a year when security, costs to local authorities and lost revenue from the two Duchies is taken into account.

“It’s time the palace finances were brought into line with those of other public bodies, with annual budgets agreed by parliament, properly scrutinised and published independently, not by the royal household.”