Are Christmas Carols Well-Versed for Tax?

Good King Wenceslas looked out…

When the aforementioned monarch saw the poor man and decided to take him some food, wine and fuel for his fire, was he providing a taxable benefit?

Well, if the man had been one of Wenceslas’s employees, then yes, that would be taxable. But given that the king didn’t recognise him and had to ask the page, “Yonder peasant, who is he?”, it’s highly likely that the poor man was not an employee.

In that case there’s no taxable benefit issue and the king can be as generous as he likes!

Deck the hall with boughs of holly… and pay more tax?

If you’re providing holly to deck the halls with, or chestnuts to roast on an open fire, are these tax-deductible?

Let’s say you’re an employer and you’re giving these as Christmas gifts to your staff. They have no resale value (the employees are very unlikely to go and sell the holly or chestnuts in the Christmas market). HMRC say that they would be likely to count as “trivial benefits”, because they won’t cost you very much per employee, and therefore there’s no extra tax or National Insurance to pay on those.

Be careful though, don’t go overboard. If you provide your employees with not only a bag of chestnuts but a Fortnum & Mason’s Christmas hamper apiece, then this may no longer be a trivial benefit and you could have to pay class 1A National Insurance on the hampers!

Unusual ways of travelling

What if over Christmas you put your car away and visited your clients “in a one-horse open sleigh”? Or what about the three kings “traversing afar”, presumably riding camels? Would those journeys be tax-deductible?

When you’re travelling on business in your own vehicle, you can usually claim tax relief on the cost of that travel, at HMRC’s approved rates. But those rates only apply to cars and vans, motorcycles, or bicycles, and HMRC specifically excludes any other kind of vehicle, such as a horse-drawn sleigh, from the rules about claiming business mileage. And they don’t even mention mileage when you’re riding on horse or camel-back.

I would probably use the rate for a bicycle, as being the nearest equivalent – a vehicle propelled by a (human) animal rather than by fuel – and be prepared to discuss this with a HMRC inspector.

That’s as long as the journey is for business, though. If you’re visiting clients in your one-horse open sleigh, then that would be tax-deductible, and you’d just need to wrap up warm! But the kings weren’t travelling on business, they were taking gifts rather than travelling to trade. So they probably couldn’t claim any cost for the journey.

Watching (tax-deductible) sheep

It’s been speculated that the shepherds were out “watching their flocks by night”, because it was lambing season and they were protecting the ewes and their lambs from predators.

That means that the sheep count as a production herd (the ewes are kept for what they yield while they’re alive, such as wool and live lambs), so the shepherds would put them in their accounts as a capital asset of the business.

What about their sheepdogs?

As working animals rather than pets, they count as assets of the business too. So food and veterinary care for both the sheep and dogs would be a tax-deductible expense of the business.

“I wish it could be Christmas every day”…

What would that mean for your business, if it were Christmas every day? Would you be unable to ever bring your staff into work?

No, you wouldn’t! It’s not a statutory requirement to give staff the day off on public holidays. So if it were Christmas every day, you wouldn’t have to give your staff every single day off – but you would still have to make sure they were given the statutory minimum annual leave at least.