What are the financial planning questions facing Santa Claus as he enters his busiest time of the year?
FTAdviser finds out...
Is there a requirement on Santa to auto-enrol the elves?
We all know that Santa Claus has little helpers in every country. Those based in the UK pose a burning question for Father Christmas. Are the elves his employees?
If Santa Claus has the right of control, which means he has control over what the elves have to do, where they do it, when it has to be done and how it has to be done, then this activity is considered to constitute employment.
This means that the man in red himself would have auto-enrolment responsibilities to fulfil for his UK-based elf ‘employees’.
So even short-term, seasonal, temporary staff or other staff who are not on regular hours or incomes paid through a payroll, attract automatic enrolment duties for their employer.
A cautionary tale indeed for some employers this festive season.
Is the cost of replacing his suit every year tax deductible?
Santa has to look ‘top drawer’ so getting a new suit each year is simply a must. But can he claim this cost as a tax deductible expense?
It would appear not, as there is no deduction available for the costs of clothing which forms part of an ‘everyday’ wardrobe. This remains the case even where the taxpayer can show that they only wear such clothing in the course of their profession.
It is irrelevant that the person chooses not to wear the clothing in question on non-business occasions. The only question is whether the clothing might suitably be worn as part of a hypothetical person’s ‘everyday’ wardrobe.
Most professionals have to keep up appearances, but their clothing costs are not allowable, even where they amount to a quasi-uniform.
The cost of clothing that is not part of an ‘everyday’ wardrobe, for example a nurse’s uniform or evening dress worn by a professional waiter, faces no such bar to qualifying as a deduction for tax purposes.
Can Mr Claus’ red suit with white fur trimming be ‘everyday’ attire? Surely not!
Are Santa’s profits taxable in the UK?
As hot as a mince pie fresh from the oven, this one. Are Santa’s profits taxable in the UK?
Well profits of a trade arising to a UK resident are chargeable to tax, wherever the trade is carried on.
However, profits of a trade arising to a non-UK resident are chargeable to tax only if they are generated by the trade being carried on wholly in the UK. If the non-resident partly generates profits in the UK and partly elsewhere, then the part of the trade carried on in the UK is subject to a tax charge.
On this basis, a simple ‘overflight’ once a year presumably won’t make Santa a UK resident. Or could delivering goods to UK addresses be classed as carrying on a trade wholly or partly in the UK?
