In a large bowl, sift together flour, sugar, salt, baking powder, cinnamon and nutmeg. Soften the butter and Mix in until a crumbly Texture.
Stir in milk and egg gradually until a smooth.
Knead lightly, then turn out onto a lightly floured surface. Roll or pat to 1/4 inch thickness. Cut with a doughnut cutter, or use two round biscuit cutters of different sizes.
Carefully drop doughnuts into hot oil, a few at a time. Do not overcrowd pan or oil may overflow. Fry, turning once, for 3 minutes or until golden. Drain on paper towels.
Decorating the Donuts
Line 2 baking trays with baking paper.
For snowmen doughnuts, dip 6 donuts into White Melts. Allow excess to drip away. Place, choc-side up, on prepared tray. Decorate with orange Smarties, other colourful Smarties and Dark Choc Bits, using picture as a guide. Allow to set.
For reindeer donuts, dip remaining donuts into Milk Melts. Allow excess to drip away. Place, choc-side up, on prepared tray. Decorate with White Choc Bits, other colourful Smarties and pretzels, using picture as a guide. Allow to set.