Christmas get-togethers will be cut by 10% this year SMEs say(Image: Getty Images)

Labour's budget cuts force SMEs to scale back Christmas celebrations, impacting staff morale

by · Wales Online

SME owners and decision makers are attributing their scaled back Christmas celebrations this year to the new budget introduced by the Labour government, as per recent research.

Despite Christmas festivities being considered one of the best working days of the year, smaller businesses plan to reduce their celebrations by 10%.

Over half of SMEs believe that festive celebrations play a crucial role in boosting team morale, but are having to make the decision to cutbacks on how much they spend this year.

Instead of dinning at Michelin star restaurants or bringing in a live band the average SME is planning to allocate just £1,353 for their end-of-year celebrations in 2025 equating to £108 per employee.

Though businesses partly blame the Labour party's recent budget announcement on scaling back, increased supplier costs and lower demand for services also mean SME's have to be more careful with spending.

A spokesperson for business account company, ANNA, who conducted the survey said: “It’s a fun time of year but Christmas parties can be very expensive, and when that’s paired with a tough trading year, it’s no wonder plans are being scaled back."

A third of businesses will be opting for drinks only this Christmas(Image: Getty Images)

"But we hope that Christmas parties are a chance for companies to have some fun - whether it’s a lavish affair or drinks in the office."

According to the account company, expenses from parties can be claimed back at the end of the financial year - if you make sure to keep the receipts.

“It’s a real shame that so few businesses know they can claim £150 tax free per employee for seasonal parties - which would at least go some way towards making Christmas planning more achievable.”

"First step is keeping all your receipts for party expenses, and keeping track of what you are spending per employee to ensure you make the most of this party perk, without over spending - or it becomes taxable."

"It's claimable at the end of your company's financial year, when you do your accounts and file them with HMRC."