It's Christmas Day in Beckindale. Jack hears a noise downstairs at 3 Demdyke Row which turns out to be Robert opening some of his presents. Joe is annoyed because Kate stayed out with David and the children on Christmas Eve. Jack tells Kathy that he has decided to move out of Demdyke Row into the cottage next door to Emmerdale Farm today. The atmosphere is strained between Joe and Kate, but they decide to make up. Alan and Henry reflect on their lack of family at Christmas. Joe buys Kate a black slip; she has bought him a personal computer to use for the farm accounts. Rachel, Mark and David have bought Kate a puppy. Joe isn't happy and argues with her. Joe confides in Jack that he is not coping very well as a step father. Henry and Annie talk about their families. Kathy invites Alan for a