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.

Conclusion

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.

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