2026: A year of change for UK businesses

Reforms that were once proposals have started to reshape workplaces, rental markets and reporting obligations, while further changes continue to emerge. Understanding the impact of these developments will be crucial for businesses looking to remain compliant and avoid unnecessary risk.

Gurkaran Singh Gill from ARAG Law takes a look.

A year of implementation rather than anticipation.

For many businesses, 2026 has been a year of implementation rather than anticipation. Reforms that were once proposals have started to reshape workplaces, rental markets and reporting obligations, while further changes continue to emerge. Understanding the impact of these developments will be crucial for businesses looking to remain compliant and avoid unnecessary risk.

Gurkaran Singh Gill from ARAG Law takes a look.

Employment rights

The biggest legal development of the year has been the phased implementation of the Employment Rights Act 2025. Several reforms have already taken effect, including Statutory Sick Pay being available from the first day of absence, the removal of earnings thresholds for SSP eligibility, and enhanced family leave rights. Employers are also adjusting to the launch of the Fair Work Agency, which brings together the enforcement of a number of employment rights under a single regulator. Looking ahead, further reforms around unfair dismissal, flexible working and zero-hours contracts are expected during 2027.

For more information on employment law reforms, please click here Employment Rights Update: What’s changed so far in 2026 and what to expect next | arag.co.uk

Renters' rights become reality in England

After years of debate, the first phase of the Renters' Rights Act is now in force. Section 21 notices have been abolished, landlords are relying on revised possession grounds, and new rules governing pets in rented properties have arrived. Landlords are also adapting to longer notice periods in some circumstances and greater evidential requirements when seeking possession. The reforms represent the most significant change to the private rented sector in a generation and are likely to continue evolving over the coming months.

For our latest article on the Renters' Rights Act, please click here Renters’ Rights Act: How the first wave of reforms are reshaping the rental market | arag.co.uk

Companies House verification

The Economic Crime and Corporate Transparency Act continues to transform corporate compliance. Directors and people with significant control (PSCs) must now verify their identity with Companies House and obtain a personal verification code. The changes are designed to improve transparency, reduce fraud and increase confidence in the accuracy of company records. Businesses that have not yet completed the process should ensure they understand the relevant deadlines.

Making Tax Digital arrives

One of the most significant administrative changes for sole traders and landlords has finally begun. Since April 2026, those with qualifying income above £50,000 must comply with Making Tax Digital for Income Tax. Instead of relying solely on an annual Self Assessment return, affected individuals are required to maintain digital records and submit quarterly updates using compatible software. The regime will be extended to lower income thresholds over the next two years.

Online safety obligations expand

The Online Safety Act continues to move through implementation, with Ofcom introducing and enforcing a growing range of requirements. While much attention has focused on social media and technology firms, many organisations offering online communication services, user-generated content or digital platforms may find themselves subject to the legislation. Businesses should ensure they understand whether their services fall within scope and what obligations may apply.

Higher employment costs

Alongside legal reforms, many employers have had to contend with increased payroll costs during 2026. Changes to statutory payments, National Minimum Wage rates and wider workplace compliance obligations have added pressure to operating costs, particularly for small and medium-sized businesses. Combined with employment law reforms, organisations are increasingly reviewing workforce planning, contracts and HR procedures to ensure ongoing compliance.

Preparing for 2027

While 2026 has already been a year of significant change, many reforms are only the beginning. Further Employment Rights Act provisions, additional Making Tax Digital requirements and ongoing adjustments to the rental sector are expected throughout 2027 and beyond. Businesses that take time now to review processes, policies and documentation are likely to be best placed to adapt.

More to come

These are just a few of the legal and regulatory developments shaping the business environment in 2026. With further reforms already on the horizon, keeping up to date can be challenging.

Fortunately, all ARAG policyholders can contact their legal advice helpline for guidance on these and any other legal or tax matters affecting their business

Disclaimer: all information in this article was correct at time of publishing.

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