With the recent EU declaration that COVID-19 travel restrictions won’t apply to Santa this Christmas Eve, it’s all lights green in Greenland*. With just weeks to go until the big day, Father Christmas himself is busily sorting out his tax refund paperwork to make sure he doesn’t end up choking on his tax bill while he’s stuffing his jolly face with mince pies, milk and cookies (more about those later). Working during the holidays is enough to wrinkle anyone’s stockings. There’s no point in making things worse by leaving you own cash under the taxman’s Christmas tree each year. Let’s take a look at what Santa should be crossing off his expenses list for 2020/21

Travel

Work travel expenses are usually the largest part of any tax refund claim. Now, Santa’s technically a resident of Greenland for most of the year. His work takes him all over the world, though, so he’s got a lot of red tape and “double taxation” paperwork to sort through.

In the UK, for example, he’d ordinarily be entitled to Approved Mileage Allowance Payments of 45p per mile for the first 10,000 miles and 25p per mile beyond that. Most of the year, he doesn’t see a lot of benefit from that. However, since he typically puts about 316,899,308 miles under his sleigh runners in a single night on Christmas Eve, he’d be looking at a yearly refund in the region of £79 million on travel alone!

Of course, we’re assuming that his work sleigh would be counted as a car or van for AMAP purposes. There doesn’t seem to be a specific rate for reindeer-powered transport. What are the CO2 emissions of a 300lb moss-eating ruminant anyway? Probably impolite to ask...

Food and accommodation

Surprisingly for someone doing so much work mileage, Santa’s other on-the-road expenses are pretty light. He manages to do all his travel in a single night, meaning no overnight stops and hotel bills to claim for. Also, a lot of his food needs are handled by donations from his customers (remember those mice pies we mentioned?), which has a few interesting tax implications.

Generally, anything your receive on top of your basic salary counts as a taxable “benefit-in-kind”  – but surely not even HMRC could be that much of a Scrooge, could they?

Other work expenses

With the main travel expenses out of the way, we’re left with the usual suspects – those little extra costs that so many people miss in their refund claims. Wear and tear on the sleigh would generally be considered covered by the AMAP rates, of course.

However, that fuzzy red suit isn’t going to launder or repair itself and he has a number of working animals to take care of.

The workshop probably goes through a lot of replacements and cleaning bills for essential tools, as well. These are all crucial elements of a properly festive refund claim, and Santa wouldn’t stay jolly for long if he missed out.

But wait...

Here’s the big question, though. Who does Santa actually work for, anyway? Does he even have an “employer”?

Employment status is one of the trickiest areas of tax law, and it leads to all kinds of confusion and trouble. Getting lumbered with the wrong status can be seriously damaging to your wealth – not to mention denting your festive spirit. If Santa qualifies as self-employed (elf-employed?), then most of the standard tax refund rules go straight up the chimney. Even if he doesn’t get tangled in the IR35 laws on off-payroll working, he’ll still have to register for Self Assessment and start filing tax returns.

That’s not necessarily a bad thing, though. Under Self Assessment, most of Santa’s unavoidable work expenses can still be used to bring down his yearly tax bill. Instead of claiming back tax on his pay, he counts his eligible expenses directly against the profits he’s being taxed on. This is a huge area of tax law, and a very difficult one to get the best from. Even so, with the right help, he’ll never end up over-stuffing the taxman’s stocking.

Whatever kind of work you do, whether you’re self-employed or on working full or part time , RIFT can help keep you on HMRC’s “Nice List”. At the same time, we’ll make sure you get back everything you’re owed and never pay a penny more than you should. You don’t need to wait till you hear reindeer on your rooftops to get your refund claim rolling. Talk to RIFT and let’s save Christmas together.

Merry Christmas from RIFT!

*Despite what you might have heard, Santa Claus actually lives and works in UUmmannaq, in the Spraglebugten Bay area on the western side of the island. We know – it sounds like we’re making up a bunch of funny names, but the Greenland travel agent industry wouldn’t lie about something this important. If you fell for the popular “North Pole” conspiracy theory, be advised that there are many impostor Santas about, and HMRC takes identity theft very seriously.