It would be difficult to find a country in which businesses have it good at the moment. The globalised economy is going through unprecedented levels of volatility due to geopolitical events, conflicts, and resource shortages, let alone supply shortages due to tariffs.
This naturally extends to the UK, where our small island is subjected to these very same issues, to which it is more vulnerable in a lot of cases, unlike its western competitors. Add into the mix a couple of clear domestic challenges, and we’ve got ourselves some difficult circumstances for doing business in 2026.
UK businesses are currently contending with rising energy costs, increased tax burdens, and new rental reforms that cause more volatility, so without any further ado, let’s discuss these points in more detail.
The Renters’ Rights Act
The Renters Reform Bill, otherwise known as The Renters’ Rights Act, is a new set of laws that set out to empower tenants, getting rid of no-fault evictions and fixed-term contracts, as well as making it more difficult for landlords to increase rental charges.
This is largely seen as a huge victory for the millions of UK tenants, but for businesses, it’s a bit more mixed. Companies that are involved in property, like property management firms and estate agents, will likely experience cash flow inconsistencies due to the abolition of fixed-term contracts, as it is now much less predictable when tenants are on the market. Furthermore, with no-fault evictions gone, landlords will have less flexibility and control over their own property portfolio – though it is worth stating that they are still able to repossess their properties using a section 8 eviction.
Property-related businesses can also expect cost increases when it comes to staff training costs and legal fees. Because the paradigm has shifted, professionals in the sector will now require training to do their jobs effectively, and firms will require more support from legal professionals like tenant eviction law specialists.
Increased Taxes
Employers’ contributions to national insurance have increased from 13.8% to 15%, which might not sound like much, but for an employee earning around £30,000 per year, this increases how much tax businesses must pay by over £850 per year. For smaller companies that are more reliant on a large workforce, the effects of this can be particularly devastating.
On top of this, corporation tax and dividend taxes have both increased. Corporation tax has increased from 19% to 25% for companies with profits above £250,000, while dividend tax rises have risen by 2%, primarily affecting owners who pay themselves in the form of dividends.
Staffing Shortages
Staffing Shortages
The UK isn’t exactly a stranger to staffing crises. Ever since the UK left the EU in January 2020, the country has lost millions of free-moving overseas workers from EU nations. As a result, businesses that operate in hospitality, healthcare, social care, and agriculture have all suffered from a recruitment crisis ever since. These missing workers come in the form of so-called Skilled Workers and Unskilled Workers, who have traditionally supported UK businesses in entry-level roles and more technically challenging professions.