Category Archives: Bit of fun

Santa’s sleigh dilemma

I know what you’re all thinking…does Santa own his sleigh personally and claim mileage, or have it as a company sleigh?

Unfortunately he didn’t respond to my freedom of information request sent last week, apparently I asked at a busy time of year…so I’ve done a few calculations of my own.

How many miles?

One thing we know for a fact is that he covers a lot of miles.  Thankfully clever boffins before me have already done the calculation and decided Santa does approximately 200,000,000 miles a year (all on Christmas eve).

Mileage claim

If he were to claim mileage, and assuming the sleigh is treated as a car, he’d get 45p/mile for the first 10,000, 25p/mile for the rest.  Total expense claim = (10,000 x 45p) + (199,990,000 x 25p) = £4,500 + £49,997,500 = £50,002,000.

I’d guess the above figure would trigger a red flag at HMRC, it’s a little larger than the travel claim for most one man businesses.  However, he should be able to produce a diary showing he made the substantial journey on Christmas eve.  HMRC should be able to verify some of the distance covered using Google Maps/AA Route Planner, and possibly even get some confirmations from individuals around the world that Santa did deliver (and pinch any nibbles left out for him).

Company sleigh

If on the other hand it’s treated as a company vehicle the expense claim would be very different.  The company would get tax relief for all the costs of running the sleigh:

  • Servicing – this should be cheap as there aren’t many mechanical parts, and the elves are able to do most tinkering required at mates rates.
  • Insurance – should also be cheap, Santa’s old enough to have a hefty no claims discount.
  • Fuel – generous parents of good kids provide much of the reindeer food required.
  • Depreciation – Santa’s had the same reindeer for ages, so they appear to have a very long useful economic life meaning low depreciation.
  • Road tax – Santa’s sleigh is declared SORN for 364 days of the year, and doesn’t even use the road network on the remaining day.

So, doesn’t look like Santa’s company would have any significant costs to offset against corporation tax, and there would be very little VAT to reclaim.

Benefit in kind

We also have to consider Santa’s taxable benefit in kind.  It’s notoriously difficult for a company vehicle to qualify as a “pool car”, especially when it doesn’t appear anyone else is allowed to use it.

  • CO2 emissions – 8 large reindeer running very fast (about 6,500,000 miles per hour by some estimates) and an overweight man exhaling heavily as he “ho ho ho”s do lead to hefty emissions.  This is before we factor in the impact of elves producing all the toys, and the coal for the naughty kids, as these don’t relate directly to the sleigh.
  • List price when new – 8 magical reindeer would attract a very high price at auction.  Similarly a sleigh with sufficient capacity to carry presents for all the kids in the world will need to cope with a payload of an estimated 2,000,000 tonnes.  Parkers Guide unfortunately doesn’t provide a valuation of Santa’s sleigh, but it’s likely to be very high.

Given the above, it’s safe to assume that the taxable benefit in kind on Santa would be huge.


Santa will almost certainly use the mileage method.  Doing so will lead to a massive expense claim, whilst the actual cost suffered by Santa is relatively low.  Indeed, based on the above, all accountants should be recommending their clients buy sleighs personally to use in the business.

Topsy turvy tax rates

There’s loads of different taxes out there to sting you whatever you choose to do…but for the purpose of this blog I’m just looking at personal taxes.

In my opinion, these are completely at odds with what they should be.  This is regardless of whether you look at it from a perspective of fairness, or what we as a country should want to encourage.

Below is a table of how much tax you’d pay if you only had one type of income, being taxed by the method selected.  For this purpose I’m including NICs and assuming that the CGT qualifies for entrepreneurs relief, using 2012/13 tax rates/thresholds).


,£30k earnings,effective %,£150k earnings,effective %


Rental/bank interest,£4.112,13.7%,£53.598,35.7%


Capital gains,£1.910,6.4%,£13.910,9.3%



So as you can see, getting that much money as a salary means you pay the most tax.  A bit less if it’s from property rental/bank interest (mainly due to lack of NICs).  Less still for dividends (some will rightly argue corporation tax will have already been paid on these), then capital gains, then finally inheritance (again the dead individual would likely have paid tax when they generated the wealth).

It strikes me that there’s not far off an inverse correlation between how much hard graft you have to put in to get the cash taxed in that manner, with the effective tax rate paid.  Ok so bank interest is fairly high up the list tax-wise and involves no/negligible effort…but nobody’s getting rich from bank interest these days!

So, why is it this way?

Cynics would say that those in power tend to come from wealthy families (and/or are heavily lobbied by wealthy families), so they’re keen on keeping inheritance and investment income taxed at a lower rate.

I think the main argument for it being this way is due to ease of collection/difficulty to avoid.  PAYE does a great job of taking cash off employees before they get it…plus employees can’t offset many costs against their income, nor do they find it easy to move overseas to avoid UK tax.  Also the majority of the population work for a living…relatively speaking very few get significant amounts of the other forms of income.

However, ease of collection is a questionable reason from a moral standpoint.  “Like taking candy from a baby” doesn’t mean you should take as much candy as you can from babies.

I’m aware I can’t get on my high horse about this, where we can we try to help clients move most their earnings away from salary and into lower taxed forms.  I guess my response to that would be “blame the game, not the playa”…and perhaps also “papa’s gotta eat”.

Tax avoidance from the Game of Thrones characters

So I’m new to blogging…but here’s my starter for ten.

Famous people love tax avoidance.  Game of Thrones characters, despite being mythical, are no different.  Some of their main attempts explained below:

Tyrion LannisterTyrion Lannister:

– As hand of the King, Tyrion is part of the government.  This enabled him to claim Casterly Rock as his primary residence, and his lavish King’s Landing property funded as a second home by the taxpayer.

– He managed to argue that all expenditure on alchemist wages and materials for the Wildfire used in the Battle of the Blackwater qualified for R&D relief.

– Tyrion’s father Tywin handed Casterly Rock down as a potentially exempt transfer for IHT.  Whilst Tyrion resents his father, he’s hoping the old man outlives gift by 7 years to avoid IHT on his death.

Eddard (Ned) Stark:Ned Stark

– As the North is a “disadvantaged area”, the Starks were able to gain NIC holidays on salaries for their troops, enabling them to fund an army cheaper than their enemies.

– Ned’s proud of living at Winterfell.  What’s less well known is he was moved there by the council after having a sufficiently large family (including bastard sons and hostages) that they outgrew all the local council houses.

– As any Stark will tell you, “Winter is coming”, so Ned and his family are very grateful to Gordon Brown for bringing in the winter fuel payment.

Daenerys TargaryenDaenerys Targaryen:

– Daenerys does not live on Westeros, so is not tax resident there, giving her many tax benefits.

– She was careful to receive the dragon eggs as a gift from her husband only after their marriage.  This meant they were exempt from capital gains tax as a transfer between spouses.

– Now the dragons are growing and increasing in value, she’s convinced HMRC that dragon rearing is a trade rather than investment.  This is vital, as it means on any future disposal they’ll benefit from entrepreneurs relief.

Theon Greyjoy:Theon Greyjoy

– Theon is a “non dom” as he was born on the Iron Islands and retains family there, but having lived on Westeros for a while he is tax resident.  This enables him to choose whether or not to use the remittance basis.

– Having recently had his manhood removed, Theon is looking to see what additional disability benefit this may entitle him to.  Relative to other characters his disability is minor, but he’s still trying to argue it reduces his earning potential.

Petyr BaelishPetyr Baelish:

– Petyr’s income mostly comes from his brothels.  Whilst evasion rather than avoidance, as most transactions are in cash, he keeps a lot of the profit off the books, thus out of the taxman’s hands.

– The above hasn’t proved too much of a problem for Tyrion or Theon, regular visitors.  They don’t ask for a receipt as they know full well that even the best tax advisers in the Seven Kingdoms can’t justify a prostitute as a tax deductible expense.

Jon SnowJon Snow:

– Jon took the “cut off your nose to spite your face” attitude to tax avoidance.  By becoming a member of the Night’s Watch he gave up any entitlement to land or riches, meaning there’s less for him to pay tax on.

– A benefit of the Night’s Watch is that living accommodation on The Wall is considered necessary for proper performance of his duties.  This enables him to pay for it out of his pre-tax income.


The above is in no way endorsed by HBO, images courtesy of GameofThrones wiki.