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.
Heat oil in deep-fryer to 190°C
Carefully drop doughnuts into the 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, chocolate side up, on prepared tray. Decorate with orange Smarties, other colourful Smarties, and Dark Choc Bits. Allow to set.
For reindeer donuts, dip remaining donuts into Milk Melts. Allow excess to drip away. Place, chocolate side up, on prepared tray. Decorate with White Choc Bits, other colourful Smarties and pretzels. Allow to set.