5 Legal priorities UK SMEs should have on their radar for 2026

If you run a small or growing business, it is easy to assume that regulatory change is something that happens only in large corporates, regulated sectors, or organisations with compliance teams and board sub-committees. But that is not the case in 2026, and SMEs are encouraged to take note.

The changes coming into force this year land squarely where SMEs feel them most acutely: people, cashflow, systems, customer journeys, and day-to-day governance. However, reassuringly, none of what follows is unmanageable. Provided it is approached as a programme of sensible housekeeping, rather than a last-minute reaction, it can be dealt with calmly and efficiently.

At Lawyerlink, we are focusing on five legal priorities with SME clients. Each priority is explored in more detail in separate in-depth articles by our team, so that SMEs can plan the year ahead with clarity and confidence.

2026 at a glance: Dates worth diarising

These are the dates we are actively encouraging clients to put in their diaries now:

January 2026

New consumer savings schemes protections begin (Christmas clubs and similar “pay-in-advance” schemes).

February 2026

First tranche of changes under the Employment Rights Act 2025 (trade union and industrial action reforms).

April 2026

Further Employment Rights Act 2025 changes (including Statutory Sick Pay from day one and day-one paternity and parental leave).

Making Tax Digital for Income Tax begins for qualifying income over £50,000 (based on the 2024–25 tax year).

Spring 2026

Companies House reforms under the Economic Crime and Corporate Transparency Act 2023 continue to roll out, including mandatory identity verification for directors and others by Spring 2026 and further changes later in 2026.

June 2026

The Data (Use and Access) Act 2025 introduces new statutory requirements for organisations to operate data protection complaint-handling procedures. Commentary from multiple legal sources anticipates that the formal obligation on data controllers to have a process in place will be required by mid-2026 (around June).

October 2026

Later stages of the implementation of the Employment Rights Act 2025 are expected to take effect, including restrictions on “fire and rehire”, third-party harassment liability, and extended employment tribunal time limits.
Although this list may appear extensive, there is no cause for concern. In practice, the steps required are straightforward once it is clear which category or categories apply to your business.

1) Employment law changes: the Employment Rights Act 2025 rollout

Employment risk rarely arises from a single dramatic incident. More often, it is the cumulative effect of small gaps: policies that no longer reflect practice, inconsistent management decisions, incomplete records, and avoidable disputes that escalate unnecessarily.

The Employment Rights Bill became the Employment Rights Act 2025 on 18 December 2025. ACAS (the Advisory, Conciliation and Arbitration Service) has been clear that most of the substantive changes will take effect across 2026 and 2027.

What is changing in 2026:

• February 2026:

Dismissal for taking part in industrial action becomes automatically unfair. Several trade union and industrial action rules also change, including reduced notice periods from 14 to 10 days and industrial action mandates extending to 12 months.

• April 2026:

Statutory Sick Pay becomes payable from day one (rather than day four), and the Lower Earnings Limit is removed. Day-one paternity leave and day-one unpaid parental leave are introduced.

• October 2026:

“Fire and rehire” becomes automatically unfair in most cases. Employers may face liability for third-party harassment unless they have taken all reasonable steps. Most employment tribunal time limits extend to six months.

Read our in-depth review of these changes: Employment law in 2026: The practical SME checklist under the Employment Rights Act 2025

 

2) Companies House changes: Identity verification and who can file

Under the Economic Crime and Corporate Transparency Act 2023 programme, Companies House is transitioning to a more active “gatekeeper” role. The government’s transition plan sets out a series of milestones that will affect SMEs throughout 2026.

What is changing in 2026:

By spring 2026, Companies House expects to be able to make identity verification compulsory for the presenter of any filing, and to require third-party agents filing for companies to be registered as Authorised Corporate Service Providers (ACSPs).

By the end of 2026, Companies House expects to complete the identity verification transition and begin compliance activity against individuals who have failed to verify their identities.

For many SMEs, the confirmation statement has historically been one of the most routine annual tasks. That is changing.

Companies House guidance now makes clear that confirmation statements will not be accepted unless all directors have verified their identities and each director’s personal verification code has been included.

Read our in-depth review of these changes: Companies House changes in 2026: Identity verification, who can file, and the “small admin” that can become a big problem

3) Tax administration: Making Tax Digital

Making Tax Digital for Income Tax is one of our top five priorities because it is fundamentally operational. It changes how many founders, landlords and sole traders keep records and interact with their advisers.

HMRC’s guidance is explicit: if your qualifying income (typically self-employment and/or property income) exceeds £50,000 for the 2024–25 tax year, you must use Making Tax Digital for Income Tax from 6 April 2026.

Key points to be aware of:

1. Making Tax Digital for Income Tax will initially apply to sole traders and landlords registered for Self-Assessment and have qualifying income streams.
2. The rollout is phased: the £50,000 threshold applies from 6 April 2026, followed by a £30,000 threshold from 6 April 2027.
3. Even where HMRC writes to you, it remains your responsibility to check whether the rules apply and to ensure you are prepared.

Read our in-depth review of these changes: Making Tax Digital for Income Tax: what SMEs need to do before 6 April 2026

4) Consumer law: Customer money, subscriptions and trust signals

Consumer trust underpins sustainable business growth. Increasingly, regulators are treating aspects of the customer journey as legal compliance issues rather than matters of commercial preference.

The Digital Markets, Competition and Consumers Act 2024 is already reshaping the consumer protection landscape. In 2026, two areas are particularly relevant for SMEs.

• Consumer savings schemes

If your business operates a Christmas savings club, a “pay monthly then redeem later” arrangement, or a stamp-, voucher- or credit-based savings scheme, these rules may apply.

Government guidance confirms that in-scope schemes must comply from 1 January 2026. Where the regime applies, traders must put in place appropriate insolvency protection, typically through insurance arrangements or by holding customer funds on trust.

There is a limited small business exclusion in certain circumstances, broadly where annual turnover is under £1 million and individual consumer accounts are not credited with more than £120 at any one time, subject to a modified rule in a business’s first year.

• Subscription contracts

The subscription contract regime under the Digital Markets, Competition and Consumers Act 2024 is widely expected to commence no earlier than autumn 2026, subject to secondary legislation and guidance.

For most SMEs, 2026 should therefore be treated as a preparation year, allowing time to review subscription models, renewal processes, cancellation mechanics and customer communications.

Read our in-depth review of these changes: Consumer law in 2026: trust, transparency and “no surprises” customer journeys

5) Data protection: Data (Use and Access) Act 2025 changes bedding in through 2026

The Data (Use and Access) Act 2025 received Royal Assent on 19 June 2025. The government’s commencement plan confirms that its provisions will be introduced in stages.

Two practical points are particularly relevant for SMEs:

1. Government guidance confirms “stop the clock” mechanics for subject access requests where clarification is required, and that organisations are required only to make reasonable and proportionate searches.
2. The commencement plan states that measures requiring controllers to establish data protection complaint-handling processes are expected to commence approximately 12 months after Royal Assent, i.e. around June 2026.

Read our in-depth review of these changes: AI and data protection in 2026: the practical SME playbook under the Data (Use and Access) Act 2025