Compliance anxiety among women running UK small businesses has not gone away. In its latest Voice of Small Business index, the Federation of Small Businesses highlights regulation, tax changes and employment law as major pressures facing owners, often alongside cash flow and customer acquisition. The best way to reduce that uncertainty is to stay informed. Here is a practical update on the legal and compliance issues for UK SMEs most likely to matter in 2026.
Five legal and compliance issues for UK SMEs to watch in 2026
Data protection: UK GDPR and the Data Protection Act 2018
Since Brexit, the UK has retained the General Data Protection Regulation as UK GDPR, alongside the Data Protection Act 2018. The principles are unchanged: if your business collects, stores or processes personal data, you must do so lawfully, fairly and transparently, and you must keep it secure.
The Information Commissioner’s Office (ICO) is the independent regulator. Under the Data Protection Act 2018, it can issue fines of up to £17.5 million or 4% of global annual turnover for the most serious breaches, so a tick-box approach is risky. Most SMEs, however, can stay compliant by reviewing what data they hold, why they hold it, how long they keep it, and who they share it with.
For women-led firms that rely on email marketing, e-commerce or client databases, a useful starting point is the ICO’s small business hub, which offers self-assessment checklists, FAQs and an advice line. If you sell online or use email marketing, also check that your privacy notices, cookie banners and consent records reflect current UK rules.
Gender pay gap reporting
Private-sector employers with 250 or more employees must report their gender pay gap annually, using a snapshot date of 5 April and publishing figures by 4 April the following year. Public-sector organisations follow a similar regime with a 31 March deadline.
The government has confirmed plans to lower the threshold to 100 employees, although the exact implementation date is still under consultation. Even if your firm is below the current threshold, the issue matters for women-led firms. Larger customers increasingly ask suppliers and subcontractors about diversity and pay equity as part of procurement and ESG questionnaires. The latest Office for National Statistics figures, published in 2025, show the median gender pay gap for all employees was 8.4% in April 2025, down from 9.4% in April 2024, but progress remains uneven across sectors.
If you are in scope, the Equality and Human Rights Commission guidance explains what to measure and publish. Smaller firms can use the same methodology voluntarily to spot pay inequities before they become a recruitment or reputational problem. See our guide to gender pay gap reporting in 2026 for the current deadlines.
Consumer rights and fair trading
The ban on surcharges for consumer debit and credit card payments remains in force under the Payment Services Regulations 2017. If you sell to consumers, you cannot charge extra for paying by card, PayPal or most other electronic methods. The rules apply online, in person and over the phone.
The Digital Markets, Competition and Consumers Act 2024 has now given the Competition and Markets Authority stronger powers to tackle fake reviews, subscription traps and misleading pricing. If you sell online, review your terms, cancellation processes and review-collection practices now, because the CMA can impose direct penalties without needing court approval in many cases.
Businesses in financial services must also meet the FCA’s Consumer Duty, which requires firms to deliver good outcomes for retail customers. Even if you are not regulated, the Duty is a useful benchmark for women-led firms selling direct to consumers: are your products, communications and customer support genuinely clear and fair?
Economic crime, fraud and Companies House reforms
Fraud remains one of the biggest financial risks for small firms. UK Finance’s 2024 half-year fraud update reported that authorised push payment (APP) fraud losses totalled £213.7 million in the first half of 2024, down 11% from the same period in 2023. Small businesses are often targeted because they may lack dedicated fraud-prevention teams.
The Economic Crime and Corporate Transparency Act 2023 has changed the compliance landscape. Since 2025, all UK companies must provide a registered email address, maintain an appropriate registered office address, and confirm that their intended future activities are lawful. Directors and people with significant control must also verify their identity with Companies House. Failure to comply can lead to penalties or strike-off action. Our guide to Companies House identity verification explains what women directors must do now.
The Act also introduces a new failure to prevent fraud offence, but it applies only to large organisations. Smaller firms should still review their anti-fraud controls, because large customers, lenders and investors increasingly expect suppliers to demonstrate robust financial crime safeguards.
If you suspect fraud, report it to Action Fraud and notify your bank immediately. For legal advice, the Law Society’s Find a Solicitor service lets you search for regulated business solicitors by location and specialism. Acting quickly can limit losses and protect your position if a regulator becomes involved.
Employment law: the Employment Rights Act 2024
The Employment Rights Act 2024 is the biggest overhaul of employment law in a generation and brings several changes that affect SMEs directly. From April 2026, statutory sick pay becomes a day-one right and the lower earnings limit is removed, meaning more workers qualify. From October 2026, employees gain a day-one right to claim unfair dismissal, although a new statutory probationary period will allow simpler dismissal processes during the first nine months for businesses with fewer than 250 staff.
Other changes already in effect include the right to request flexible working from day one, stronger protections for pregnant workers and new parents, and reforms to zero-hours contracts giving workers reasonable notice of shifts and compensation for cancelled shifts. The Low Pay Commission has recommended that the National Living Wage rise to £12.83 per hour for workers aged 21 and over from April 2026.
For a clear timeline of what applies when, see our Employment Rights Act employer timeline and the government’s collection of guidance on the Act.
Build compliance into your business routine
Regulation will continue to shift, particularly around data, consumer protection, corporate transparency and employment rights. Rather than waiting for a deadline or a problem, build compliance into your routine: diarise reporting dates, review your terms and privacy notices at least annually, and keep a simple risk register that includes fraud, cyber threats and employment law changes.
Taking the law seriously is not just about avoiding fines. It builds trust with customers, suppliers and investors, and helps future-proof your business. For women founders, staying above board on these legal and compliance issues for UK SMEs is a solid place to start.
Which compliance issue is keeping you busiest right now? Share your thoughts in the comments below.
