A quarter of small businesses in the UK have cancelled staff bonuses, festive parties and gifts to workers and clients this Christmas, a survey has found.
As the cost-of-living crisis bites, 23 per cent of small businesses have slashed or stopped bonuses, 21 per cent have cancelled office parties and 23 per cent have ditched plans for staff and customers to receive Christmas gifts this year, according to a survey by the business spending solutions company, Pleo.
Tightened belts
Businesses of all sizes are having to make savings but the belt-tightening is most acute in companies with between 100 and 249 employees. Last year, these firms spent an average of £13,476 on entertainment. This year, that figure is 24 per cent lower at £10,220.
“This year has been incredibly tough for businesses and what we’re seeing is yet another example of the financial challenges many of our business leaders are facing," James Keating, Chief Marketing Officer at Pleo said. "The Christmas period is usually a time for everyone to celebrate the successes of the past year and look ahead to the next but because of the economic environment, many businesses are putting the brakes on those celebrations.
"We will of course expect businesses to celebrate and reward staff to some degree, but this year in particular will be a little more tempered than what has perhaps happened in previous years."
Accusations of Scrooge-like behaviour on the part of bosses are partly diluted by the fact that nearly half of company senior decision-makers are planning to put the saved money into higher wages, training and travel expenses for staff in the new year.
Meanwhile, the trade body for the UK's hospitality industry is warning that there has been a collapse in Christmas party bookings at restaurants due to the looming rail strikes.
Rail workers are due to go on strike from next week.
UKHospitality said restaurants were reporting cancellation rates of up to 30 per cent which could cost the industry £1.5 billion in revenue.
"A lot of people are saying it’s too difficult to come in, and if you’re writing off next week, you might as well write off the week after, so it’s going to be an early Christmas shutdown,” said Kate Nicholls, chief executive of UKHospitality.
When large proportions of company employees are unable to attend planned Christmas office parties, they tend to be cancelled altogether, restaurateurs complain.
“If you’re having an office do, you want everyone to be there, you can’t just go ahead with only half of the team,” said Will Beckett, co-founder of restaurant chain Hawksmoor.
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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