The rising cost of justice

Businesses have been battered by rising costs in recent years, from higher energy, input and employment bills to the 6% hike in corporation tax under the previous government and the increase in employers’ NI contributions, last year.

At the same time, the legal environment in which businesses operate is becoming more and more challenging and risky.

Companies have always had a steady stream of new legislation to cope with, but resolving workplace and commercial disputes has become more difficult and more expensive.

Legal costs have outpaced inflation too. While this increases the cost of legal protection it also makes it all the more important to have such cover in place.

Delays in the courts are slowly improving but still a long way from pre-pandemic levels and the number of outstanding employment tribunal claims continues to rise. As well as extending the overall cost of making or having to defend such claims, delays create further uncertainty and cost for businesses.

Legislative dissonance

New legislation is rarely as dramatic as headline writers would have us believe and individual measures are often staggered over time, but the last year has seen the introduction of flagship reforms as well as new laws that the previous government failed to get over the line and onto the statute books before the election.

As well as the increased burden of new legislation, businesses also have to manage a lot of uncertainty. The Employment Rights Bill is likely to be passed soon, but the details around key measures and when they will be introduced is still unknown.

Online Safety Act 2023 - While aimed at major social, search and pornography platforms, Ofcom estimated over 100,000 online services could fall in scope. Any business offering online search, pornographic content or communication between users must comply.

Martyn’s Law - The Terrorism (Protection of Premises) Act 2025 introduces ‘standard’ and ‘enhanced’ duties for those responsible for premises. Businesses that can host 200 or more people, including staff, will have new responsibilities.

Employment Rights Bill - This flagship legislation designed to ‘Make Work Pay’ includes widespread reforms likely to come into force from April 2026 and into 2027.

Renters’ Rights Act 2025 - Reborn after last year’s snap election, the Act will abolish section 21 notices, give tenants more certainty, improve rental property standards and ban the use of bidding wars to drive up rents.

Tobacco and Vapes Bill - First introduced in 2023, this Bill aims to ban selling tobacco products to anyone born after 2008 and tighten rules on promoting and selling vapes.

Digital self-assessment - ‘Making Tax Digital’ will soon require any sole trader or landlord with annual income over £50,000 to submit quarterly digital updates to HMRC. The threshold drops to £30,000 in 2027 and £20,000 in 2028.

National Living Wage - After near double-digit hikes in 2023 and 2024 and a 6.7% increase this year, the Low Pay Commission is expected to make more modest recommendations (around 4%) for minimum wage increases, to be made next April.

Companies House ID verification - To make it harder to use companies for illicit purposes, Companies House has introduced compulsory online identity verification for any director or ‘person with significant control’.

More than just insurance

The price of keeping a business the right side of the law may be increasing, but the extra value that legal protection offers more than makes up for the cost.

Legal advice helpline - from Accelerated possession to Zero hours contracts ARAG’s legal advisors are on hand to provides the answers that keep businesses the right side of the law and save them a fortune in legal costs.

Tax advice helpline - as well as avoiding trouble with HMRC, getting sound tax advice can help ensure a business isn’t paying too much tax.

Online legal services - tested and trusted legal resources including a host of interactive document builders to help businesses stay compliant and organised

Confidential counselling helpline - whether struggling with issues of a family, financial or personal nature, anyone in the business can call for support.

These ‘Day One’ benefits typically justify the premium cost, even if the business never needs to make a claim on their legal expenses policy.

Legal intelligence

As well as giving policyholders enormous value, even if they never have to make a claim, ARAG provides a trusted source of legal and business support at a fraction of the typical cost.

At a time when courts have rebuked claimants for their reliance on unreliable AI-generated legal guidance, ARAG is a source of legal support that business owners can count on.

Better value in a risky world

At ARAG, we’ve always welcomed increasing claims volumes as a sign of the growing popularity and utility of our products. Legal expenses is a maturing market in the UK, but still a relatively young one.

The modestly increasing cost of legal expenses insurance is, in part, a product of its popularity and success. Businesses of all sizes are becoming more and more aware of the value legal protection offers, and using it much more often.

ARAG remains committed to delivering the best possible legal protection products with the widest cover and the greatest array of benefits. While they may not always be the cheapest available, we’re confident that they will always represent far and away the best value.

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