Father Christmas faces tax bill on company sleigh

Matt Crawford, Partner said:

Children up and down the land are looking forward to the most exciting day of the year where Santa delivers their presents, but poor old Father Christmas likely faces significant tax charges on his sleigh despite his honourable intentions.

Presents delivered by a goods vehicle won’t cause the HGV driver to end up with a tax bill associated with driving their lorry as under the BIK tax rules, it is strictly a commercial vehicle. But things aren’t so simple for Santa Clause and his sleigh.

For BIK purposes, a ‘car’ is defined as any mechanically propelled road vehicle which is not a goods vehicle, van under 3,500kg, motorcycle or ambulance. HMRC guidance is clear that simply because sleighs are rare vehicles in the UK, it does not prevent them being considered cars for tax purposes.

Worse still for Santa’s case is that the vehicle is clearly well suited to carrying elves and the carriage of passengers is a hallmark of a car. It is hard to argue that the sleigh is designed to be primarily suited for the carriage of goods when it was only designed to be used for this purpose for one night a year and the rest of the time is a vehicle of leisure.

Matt adds

I have heard that Santa’s defence will focus on proving that a sleigh is not ‘mechanically propelled’ and as it is capable of flight is not a ‘road vehicle’ for tax purposes. Father Christmas would be wise to be cautious with this approach, as the last thing he would want is HMRC classifying the sleigh as a private aircraft, which can have even more punitive tax charges.

Our tax team are of the view that the tax bill facing Father Christmas may be substantial as it will be based on the CO2 produced by the vehicle, with sprout eating reindeer known for substantial emissions. Not only that, but he faces a chunky Class 1A National Insurance bill on the BIK he was trying to claim. Perhaps we now know why he is called Saint NIC.

A HMRC spokesperson said:

The public have all seen the pictures of presents stacked up precariously on this vehicle on their Christmas cards. Nobody can seriously argue the sleigh was designed for carriage of such items as a safe and secure transportation solution. What’s more with Santa handing out such a large haul of presents every year, we hope he’s accounting for VAT correctly on all of those business gifts.

A spokesperson for Father Christmas said:

Santa takes his tax obligations seriously, pays his Elves well in excess of the Elfin Living Wage (ELW) and will cooperate with any HMRC enquiries.

Would you like to know more?

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