Work out tax cut by the Queen (8)
I believe the answer is:
Here is my best explanation:
'work out' is the definition.
('exercise' can be a synonym of 'work out')
'tax cut by the queen' is the subsidiary indication.
'tax' becomes 'excise' (excise is a kind of tax).
'cut by' is an insertion indicator.
'the queen' becomes 'er' (Abbreviation for Elizabeth Regina).
'excise' enclosing 'er' is 'exercise'.
(Other definitions for exercise that I've seen before include "Task for pupil", "Training", "Exertion to develop fitness", "Train, work out", "Do it to develop skill or fitness", "Workout", "Physical training or exertion", "problem", "Exertion to develop endurance or skill" and "Task performed to develop skill".)