When you say the profits from the Crown Estate should go to the people, that is what happens. Or rather, they go to the Treasury, which is as close as "the people" are going to get. The Sovereign Grant isn't the King's wages but is to cover the cost of official duties, including staff salaries and travel. It doesn't go to enrich the King personally, and any surplus goes to a reserve fund to be used for future spending.

It's entirely legitimate to argue that these duties should be reduced in scale, but for the time being most people seem to quite like having a royal come to open their new hospital wing. Even if we replaced the monarchy with a president, that would still have to be paid for.

The Sovereign Grant is higher than usual because it includes the cost of refurbishing Buckingham Palace. The building is an asset of the state, and if it weren't paid for through the Sovereign Grant it would simply come out of some government department's budget.

£125 million sounds a lot, and it is. However set against total government spending of £1,283 billion a year it is a drop in the ocean. If it were to be abolished entirely (and there will always be some costs to have a head of state) this would make no discernible difference to the public finances.

There are very good arguments both for and against abolishing the monarchy, but the Sovereign Grant is a red herring.