I had some vague recollection of an explanation at the time of the Adventure of the Greek Interpreter.
“You told me that he had some small office under the British government.”
Holmes chuckled.
“I did not know you quite so well in those days. One has to be discreet when one talks of high matters of state. You are right in thinking that he is under the British government. You would also be right in a sense if you said that occasionally he is the British government.”
“My dear Holmes!”
“I thought I might surprise you. Mycroft draws four hundred and fifty pounds a year, remains a subordinate, has no ambitions of any kind, will receive neither honour nor title, but remains the most indispensable man in the country.”
“But how?”