UK SMEs scale down Christmas plans due to financial strain from new government budget

In the sea of people enjoying the celebrations, sequins and beers on tap, there is money to fund everything, but it has been lost in all the mayhem, can you spot it? The answers can be found here.

It comes as research of 500 SME owners and decision makers found half blame the new budget for their scaled-back Christmas celebrations this year, according to research.

And they will be spending 10 per cent less on their festive parties this December, even though 51 per cent think it’s the best working day of the year.

The average SME will set aside just £1,353 for their celebrations to round off 2025 – equalling £108 per employee.

As well as feeling under pressure from the budget, businesses that are spending less on Christmas parties are also doing so due to increased supplier costs (41 per cent), lower demand for services (36 per cent) and high taxes (33 per cent).

Rent rises (30 per cent), concerns around winter fuel bills (28 per cent) and having more employees to pay for (26 per cent) are other reasons why they are scaling back plans.

However, 53 per cent had no idea they could claim back £150 per head in tax for their festivities.

The poll was commissioned by business account company ANNA, whose spokesperson 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. 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.

“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.”

‘A Christmas work-do is important for team morale’

The survey went on to find 53 per cent believe festive celebrations are important for boosting team morale.

61 per cent are determined to host a successful event for their company this year, with 45 per cent saying it’s because their staff deserve a reward.

And 31 per cent of those who don’t want to scrap it have too much fun to cancel it.

This year 37 per cent will be having a meal out, 28 per cent will be going for drinks and 17 per cent will be hiring a DJ.

Other popular activities include bowling, ice skating and boat trips, according to the stats by OnePoll.

Of those who are reducing costs, 47 per cent will be staying in the same city to avoid transport charges and 41 per cent will limit the amount of food and drinks per person.

However, in previous years these companies have been known to hire a live band (16 per cent), eat at a Michelin starred restaurant (nine per cent) and even go abroad (13 per cent), to celebrate the festivities.

A spokesperson for ANNA, the AI-powered business account that does your taxes, added: “Even companies that have gone ‘all out’ before might be reining it in a bit this year.

“The key thing when celebrating is the people, so all you really need to have a fun time is a great group of colleagues.”

“However businesses celebrate, we hope our new 'Party Pot' feature will help them save money and let off some steam.”