Is that business expense tax deductible? Oh no it isn’t…!
Christmas is only days away, which means that pantomime season is now getting into full swing.
So for a bit of festive fun, we wondered whether there are any tax deductible items our favourite pantomime protagonists could claim for in their accounts? Here are some tax dilemmas faced by some of the most famous panto characters.
Should Puss be taxed for his boots?
Puss’s master bought him the famous boots - but would the cost of the fancy footwear be tax-deductible?
Well, that would only be the case if Puss was a self-employed entertainer (which he wasn’t) or if the boots counted as either protective clothing or a uniform. If they were a uniform or protective clothing, then Puss’s master would have to report them on form P11D assuming the cat’s salary was over £8,500 a year, but there would be no tax to pay.
Unfortunately for Puss, his boots don’t seem to have been used as protective clothing or a uniform, so his master would also have to pay class 1A National Insurance on the cost or value of the boots.
How much tax should Jack pay for the beanstalk?
Jack traded a cow for a pile of magic beans.
That’s a classic barter transaction – no money involved.
So if Jack, and the old man who gave him the magic beans, were registered for VAT, they would have had to work out the monetary value of the cow and the magic beans, and pay VAT to HMRC on those values.
And whether or not they were registered for VAT, the monetary values would also be listed in their two sets of accounts as income – the cow’s value in Jack’s accounts, and the beans’ value in the old man’s.
Working out the monetary value of a pile of magic beans, however, would be a task beyond most of us - and would require a lot of explaining to HMRC!
Was Cinderella’s magical coach a taxable benefit?
In the story, the fairy godmother provided Cinderella with a coach to travel to the ball in.
If an employer provides an employee with a car or other vehicle to use for both business and private purposes, that’s a taxable benefit - and Cinderella was a maid, so going to the ball couldn’t possibly have been part of her job and so the coach was available to her for private use.
So Cinderella and her fairy godmother would both have extra tax and NI to pay! Although, HMRC doesn’t have any guidance for vehicles that turn back into pumpkins - so they may yet be off the hook!
How much tax did Robin Hood cost the Sheriff of Nottingham?
Robin Hood and his Merry Men cost the Sheriff of Nottingham a lot of money - so how would the Sheriff have recorded that in Nottingham Castle’s accounts?
It would have probably cost him his head if he’d attempted to just leave the income out of the records. In those days kings didn’t tend to let you off with a fine.
So he would have had to record the lost money as a cost in his accounts, similar to how he would record a bad debt.
If the Sheriff could have remembered where the money that had been stolen had come from, then it would have been a specific cost, so at least he wouldn’t have had to pay tax on that lost income.
But if he’d lost so much money that he couldn’t account for where it came from, then that’s a general provision for stolen money, and there’s no tax relief on general provisions – so to add insult to injury, he’d still have to pay tax on that income.
- 4 ways to keep your business ticking over while you travel
- Business on the beach: five holiday reads for freelancers
- Self Assessment: what you need to know about payments on account
- 6 reasons to file Self Assessment right now
- Self Assessment filing for 2016/17 is live