Small-Business Compliance Guide 2025–2026: UK legal changes you should not ignore

Running a small business in the UK has always taken grit and creativity, but recent months have tested owners on another front: regulation. New rules on employment, online safety, corporate transparency, environmental levies and data protection have, and continue to, reshape the small-business landscape at speed. Missing a deadline can mean fines, reputational damage and a scramble to retrofit processes.

This article maps the most important legal changes already in force, those arriving over the next 18 months, and the smartest ways to stay on the right side of the law, without losing sight of growth.

The rules that already changed

Compliance is the invisible scaffolding that keeps a company secure while it reaches for bigger goals. When you get the rules right, you free up cash flow, signal reliability to investors, and earn the kind of customer trust money can’t buy. In short, playing by the book gives your business the stable footing it needs to innovate with confidence and grow sustainably. With that in mind, here are the headline regulatory shifts that have already landed on the UK business landscape.

• Flexible work on day one

Since 6 April 2024, every employee can ask for flexible working arrangements from their very first day, with two requests allowed per year and a two-month decision deadline for employers. Policies and manager training should reflect the new timetable. 

• A week’s unpaid carer’s leave

From the same date, workers receive a statutory entitlement to one week of unpaid leave each year to look after dependants with long-term needs. Payroll and HR systems must track the new leave type. 

• Fair tips for hospitality staff

On 1 October 2024, the Employment (Allocation of Tips) Act forces businesses to pass 100 percent of tips to workers, publish a written allocation policy and keep three-year records. Restaurants, bars and salons should update point-of-sale systems now. 

• Leasehold freedom for property owners

The Leasehold & Freehold Reform Act 2024 will remove the historic two-year wait before leaseholders can extend or buy their freehold. If you advise on, or hold, residential property, your template contracts and client briefings need an overhaul. 

• Faster public-sector tendering

The Procurement Act 2023 took full effect on 24 February 2025, introducing a single digital portal, broader exclusion grounds for suppliers and a mandatory 30-day payment term that flows through the entire supply chain. Review standard terms so you can promise, and receive, those 30-day payments without breaching contract. 

What’s arriving between now and 2026

• Online safety obligations

Websites and apps “likely to be accessed by children” must complete Ofcom’s child-safety risk assessment by 24 July 2025 and have mitigation measures live the very next day. Expect scrutiny of age-checks, user-report pathways and content filters. 

• Stricter consumer-protection rules

The Digital Markets, Competition & Consumers Act 2024 upgrades the Competition and Markets Authority’s enforcement powers from 6 April 2025. Subscription contracts will soon need crystal-clear pricing, prominent cooling-off periods and “single-click” cancellation, likely by early 2026. Begin auditing sign-up funnels and renewal notices now. 

• Extended Producer Responsibility (EPR) for packaging

If your company places more than 25 tonnes of packaging on the UK market, you must file 2024 data by 1 April 2025and start paying disposal fees from October 2025. Because the fee band depends on material type and design, eco-friendly packaging can cut costs as well as carbon. 

• Plastic Packaging Tax (PPT) increase

From 1 April 2025, PPT rises to £223.69 per tonne on plastic packaging containing less than 30 percent recycled content. Budget for the higher rate—or redesign to lift recycled content above the threshold. 

• Corporate transparency overhaul

Companies House launched voluntary director and person-of-significant-control identity verification on 8 April 2025. Verification will likely become mandatory at the end of 2025, with a 12-month transition window. Failure to comply risks rejected filings and up to £10,000 in civil penalties. Start verifying leadership teams now via GOV.UK One Login. 

• Younger staff in workplace pensions

Secondary regulations under the Pensions (Extension of Automatic Enrolment) Act 2023 are anticipated in April 2026. They will lower the auto-enrolment age from 22 to 18 and remove the lower-earnings limit so pension contributions start from the first pound earned. Model payroll costs early to avoid surprises. 

• Making Tax Digital for income tax

Sole traders and landlords with qualifying income above £50,000 must keep digital records and file quarterly updates from 6 April 2026. The threshold falls to £30,000 in 2027. If you still rely on spreadsheets, 2025 is the year to migrate to cloud accounting software that speaks HMRC’s language. 

• Data reform: the Data (Use & Access) Bill

The long-awaited bill, set to pass by summer 2025, will scrap consent for low-risk analytics cookies, add a new data-subject right to complain and tighten AI transparency rules. Businesses will need fresh privacy notices and a rethink of cookie banners well before enforcement in 2026. 

The high price of waiting

Leaving compliance until the enforcement letter lands is a false economy. Regulators can levy penalties that dwarf the cost of early alignment; public breaches erode customer confidence overnight; and firefighting pulls talent away from high-value work. Conversely, a proactive stance lets you forecast cash flow accurately, bid for contracts that demand ESG credentials, and attract top partners who trust your governance.