What business expenses would Santa Claus claim on his Self Assessment tax return?

If Santa Claus needed to complete a Self Assessment tax return by the deadline on 31 January, what might he claim as tax-deductible expenses?

• How to register as self-employed with HMRC
• 7 self-employed business ideas
• The self-employed guide to Self Assessment tax returns
• What is business insurance?

Santa’s travel expenses

Santa Claus uses a reindeer and sleigh to get around – not your traditional company vehicle.

We can only assume that Santa’s sleigh is propelled by magic, so he wouldn’t be able to claim for fuel, even though this is an allowable expense for cars, vans and motorcycles.

Even so, he might be able to add on his tax return:

• vehicle insurance (if Santa finds a specialist provider willing to cover his reindeer and sleigh)
• meals on overnight business trips (is Christmas eve the ultimate overnight business trip?)
• the cost of a hotel room (he’ll need to relax after he’s delivered his final presents)

But keep in mind that the expenses Santa claims need to be 'wholly and exclusively' related to his business.

If Santa’s running behind schedule and starts speeding to deliver presents, air traffic control might hand him a fine. HMRC specifically excludes fines, so he wouldn’t be able to claim it as a business expense.

What about the costs for keeping his reindeer?

It’s likely that Santa finds it expensive to look after his reindeer, but the good news is that the care costs can be claimed as a business expense.

He’d be able to say that they’re working animals, which means he can claim capital allowances on them as assets.

Santa would be able to claim food, vet fees and shelter as business expenses.

What about Santa’s elves?

Santa wouldn’t be able to do what he does without his hard-working elves. And he can claim the costs of running his team as business expenses:

• their salaries (he needs to be paying them at least the minimum wage)
• their pensions (they need to be auto-enrolled in a pension scheme)
• training courses (if an elf wants to start making different toys)

On a serious note…

As Santa isn’t running his operation for a profit, there’s a huge question mark around whether he’s even in business at all.

He’ll always be making a loss – and as he brings joy to millions of children all over the world, he might be able to apply for special status with HMRC.

That’s not to mention Santa probably doesn’t come under HMRC’s jurisdiction (we’ve heard that he’s based somewhere even colder than the UK…)

While there are questions around Santa’s tax and employment status, if you’re a self-employed sole trader earning more than £1,000 or a partner in a business partnership, you’ll need to complete a Self Assessment tax return.

When it comes to working out your total profit, we’ve got a detailed guide to what you can claim as self-employed tax-deductible expenses.

And in the run up to January’s Self Assessment deadline, check out our Self Assessment hub for more information on completing your return.

If you're not sure about anything, please speak to a professional adviser or accountant for more information.

When are you planning to complete your Self Assessment return, if you haven’t done so already? Let us know in the comments below.