What business law changes can the UK expect in 2026?

Our Knowledge Lawyers highlight a range of legal developments that businesses can expect this year – including significant judgments, the progress of new legislation or shifts in regulatory approaches.   

Artificial intelligence 

Copyright and AI  

The UK government has yet to publish its formal response to the consultation on AI and copyright. Under the Data (Use and Access) Act 2025, the government is required to publish a report on the use of copyright works in the development of AI systems and an economic impact assessment, by 18 March 2026.

The government must consider the copyright policy options regarding AI training set out in the consultation, including proposals on technical measures, transparency, licensing, enforcement and AI developed outside the UK. Its initial assessment of the feedback, published in December 2025, showed that a majority of respondents supported the option of requiring licences in all cases. The government is continuing to consider all options and intends to provide a detailed summary of consultation responses alongside the report and impact assessment.

UK AI Bill

The anticipated UK AI Bill did not materialise in 2025. Policy emphasis instead focused on AI Growth Zones and AI Growth Labs and applying existing regulatory regimes, including data protection, competition, equality and online safety, to AI systems. Whether a dedicated AI bill will appear in 2026 remains uncertain (and currently seems unlikely). 

EU Artificial Intelligence Act 

In the EU, as part of its Digital Omnibus simplification initiative, the European Commission proposed targeted amendments to the EU Artificial Intelligence Act (EU AI Act) in November 2025, including potentially delaying key high-risk AI obligations to 2 December 2027 (Annex III) and 2 August 2028 (Annex I), removing the general AI literacy duty, and postponing certain requirements on marking AI-generated synthetic audio, image and text under Article 50 of the EU AI Act to 2 February 2027. See this Regulatory Outlook for more information on the proposed changes. The legislative process is now under way, with trilogue negotiations among the EU institutions expected in mid-2026.

In parallel, the Commission is advancing a voluntary code of practice on marking and labelling AI-generated content, the first draft of which was published in December 2025, with the final code anticipated by June 2026.

The Commission also intends to develop further implementation guidance, including on high-risk AI and the interplay between the EU AI Act and other EU legislation. This includes the joint guidelines by the Commission and the European Data Protection Board addressing the interplay of the EU AI Act and EU data protection law.

Banking 

Renters' Rights Act 2025: major changes to the private rented sector 

From 1 May 2026, the Renters' Rights Act will transform the private rented sector. Key changes include abolishing "no-fault" evictions, making periodic tenancies standard, and introducing stricter controls on rent increases (and see real estate section below). For lenders, this necessitates a review of buy-to-let underwriting criteria and stress testing to account for longer possession timelines and restricted rent growth. Landlords will face less control and greater uncertainty, which may lead some smaller investors to exit the market while potentially attracting more institutional capital.

UK Sustainability Reporting Standards: the end of greenwashing?

From 2026, the UK will mandate climate-related financial disclosures under the new UK Sustainability Reporting Standards (UK SRS), aligning with the global International Sustainability Standards Board framework. This creates a single, consistent standard focused on financial materiality: how climate risks affect a company's cash flows, access to finance, and cost of capital.

For borrowers, robust and verifiable disclosure processes will be crucial for accessing capital on competitive terms. Lenders will be expected to align sustainability-linked facilities with the UK SRS, demanding credible key performance indicators and third-party verification to combat greenwashing and hold borrowers to a higher standard.

Basel 3.1: tighter capital rules are coming

The UK's implementation of the Basel 3.1 international banking standards will begin on 1 January 2027 and banks will need to prepare throughout 2026.

These reforms tighten the prudential framework for bank capital, introducing stricter risk-weighting rules, particularly for unrated corporates and specialised lending. We expect this to result in upward pressure on pricing, tighter covenant discipline, and changes to loan structures.

For borrowers, especially in sponsor-backed transactions, this means preparing for longer lead times and more detailed due diligence from lenders, who will scrutinise financial metrics and EBITDA adjustments more closely than ever.

Ring-fencing regime review: potential for greater flexibility

As part of its growth and competitiveness agenda, HM Treasury's review of the ring-fencing regime could bring significant changes. If reforms proceed, ring-fenced banks may be allowed to offer a broader range of services to UK businesses, and banking groups could benefit from more flexible sharing of resources across the ring-fence. This could lead to more balance-sheet flexibility for cash management and hedging, greater appetite from major banks to support smaller regulated entities and fintechs, and increased competition in the mid-market and growth lending spaces. The outcome remains one to watch.

UK securitisation regime: simplification on the horizon

Finalised reforms to the UK securitisation rules are expected in the second half of 2026, with the Financial Conduct Authority's review focusing on simplification. Key changes are likely to include streamlined disclosure requirements, refined risk retention rules, and a clearer distinction between public and private securitisations.

For market participants, these reforms should make private transactions and warehouse facilities easier and faster to execute. The changes aim to reduce friction by clarifying responsibilities and creating more workable retention and hedging provisions, which will be a welcome development for those involved in securitisation and structured finance.

Commercial disputes

Increased public visibility over litigation

Commercial litigation in England and Wales is set to become more transparent in 2026, with the introduction on 1 January of the Access to Public Domain Documents Pilot scheme in the Commercial Court, London Circuit Commercial Court, and Financial List. Intended to close the "open justice gap", the pilot scheme will facilitate public access to documents deployed in open court hearings.

The pilot may give rise to satellite litigation over redactions, restrictions on access to certain documents, and the interpretation of the term "Critical Document", potentially leading to more contested applications and increased costs.

The increased scrutiny of court documents may encourage parties with confidentiality concerns to opt for arbitration over court litigation. 

AI in the justice system

Artificial intelligence will play an increasingly significant role across the justice system in 2026. HM Courts and Tribunals Service has signalled its commitment to the responsible adoption of AI to modernise courts and tribunals, and is expected to publish an AI adoption plan in 2026. In parallel, a Civil Justice Council working group is examining whether specific rules are needed to govern legal practitioners’ use of AI in preparing court documents, with its report also anticipated in 2026. Against this backdrop, law firms will continue to roll out legal AI tools and refine innovative deployment strategies.

Alongside the adoption of AI tools by the courts and legal practitioners, the growing integration of AI into business will generate more claims and disputes arising from the use of AI, which will require courts to grapple with novel questions and situations.

Group actions and litigation funding

Group litigation will continue to dominate headlines in 2026 and beyond. Several high-profile trials and judgments are expected in 2026, including a liability judgment in the diesel emissions litigation. The year will also bring the outcome of the government's 2025 consultation on the collective proceedings order (CPO) regime and a Court of Appeal decision on "omnibus" claim forms in group claims.

While growth in group actions will span many sectors, the November 2025 success for the claimants in litigation arising from the Mariana Dam collapse in Brazil is likely to spur further ESG-related claims against English companies for environmental harms suffered abroad.

In a development highly relevant to group litigation, the government indicated in December 2025 that it intends to adopt the two primary recommendations from the Civil Justice Council's final report on litigation funding (published July 2025). This includes a legislative reversal of the Supreme Court's 2023 PACCAR judgment, which rendered many litigation funding agreements unenforceable, and introducing "proportionate" regulation of litigation funding agreements. The government will legislate "when parliamentary time allows".

Competition 

Strategic market status conduct requirements bite, with AI and interoperability under the microscope

The Competition and Markets Authority (CMA) is expected to move from designation to enforcement under the Digital Markets, Competition and Consumers Act (DMCCA), imposing conduct requirements on search and mobile ecosystems – covering choice screens (including for AI assistants), fair ranking, publisher controls for AI-generated responses, and data portability – while consulting on more complex measures in the first half of 2026. Litigation risk and nine‑month investigation timelines mean a measured rollout, but non‑SMS firms should still prepare for broader information requests and extraterritorial reach. AI products will face scrutiny on data access, interoperability and consumer choice as the CMA updates intervention roadmaps. Please see Osborne Clarke's dedicated DMCCA page for more information.

Merger control

Phase 1 behavioural remedies: Following the CMA’s consultation on revised remedies guidance (finalised guidance is expected in early 2026), we anticipate more Phase 1 clearances based on targeted behavioural undertakings, reducing Phase 2 referrals where robust compliance and monitoring frameworks are evidenced. The draft guidance recognises rivalry‑enhancing efficiencies and provides fuller treatment of relevant customer benefits. However, remedy design will face heightened scrutiny, and the CMA may require the use of independent trustees to oversee compliance. This shift aligns with the government’s pro‑growth agenda and the CMA’s commitment to proportionate outcomes that support investment. Read more about the draft guidance.

Process reform: The CMA’s process reforms, introduced in 2025 and intended to streamline the review process, will be tested at scale through 2026, with measurable effects on pre‑notification length, Phase 1 speed and remedy design. Parties should plan around the updated templates, evidence expectations and key performance indicator targets, and expect more structured dialogue on proportionate outcomes (including targeted behavioural commitments where appropriate). By mid‑2027, the reformed review process should be embedded, with data on performance against KPIs informing further fine‑tuning.

Substance and jurisdiction under the DMCCA: The CMA's broadened jurisdiction and revised merger thresholds will continue to shape case selection, potentially bringing a wider set of vertical, conglomerate and nascent‑competition transactions into scope. Over the next 18 months, anticipate increasing use by the CMA of its expanded toolkit (including fast‑track to Phase 2 by consent and extended Phase 2 timetables) alongside heightened procedural enforcement risks in deal planning, long‑stop dates and covenant packages. Please see Osborne Clarke's dedicated DMCCA page for more details.

Merger remedies portfolio clean‑up: The CMA’s review of legacy merger remedies is expected to produce decisions through 2026 that revoke or vary outdated undertakings and orders in order to reduce unnecessary monitoring burdens. Businesses subject to historic commitments may see obligations lifted or streamlined, while monitoring resources concentrate on active, enforceable remedies. Implementation of changes are likely to roll through 2026 into early 2027.

Subsidy control: simplification with sharper scrutiny of distortions

The Subsidy Advice Unit must publish its first effectiveness report by summer 2026, following a call for inputs and government consultation on thresholds and streamlined routes. Businesses can anticipate reforms to mandatory and voluntary referral thresholds, new streamlined routes for community regeneration and arts/culture, and revisions to the sensitive sectors list.

While simplification is the policy watchword, expect competition considerations to remain central, ensuring flexibility in subsidy delivery is balanced by effective scrutiny to curb distortion risks, especially for larger interventions and sector‑specific schemes. This follows the SAU updating its guidance in November 2025.

CMA competition enforcement priorities

Through 2026 and into 2027, CMA enforcement activity is set to focus on several areas, including anticompetitive practices (such as bid‑rigging) in public procurement, competition and consumer protection in markets where consumers spend most money and time (so-called "essential consumer spend" markets). Anticipate the CMA combining its new consumer protection powers alongside its existing competition law powers, while its procedural and penalty toolkit will be deployed more routinely, increasing the stakes for non‑compliance with requests for information and preservation orders. Expect sustained Competition Act 1998 casework and cartel detection activity, with performance reporting against annual plan commitments by March 2027.

Corporate 

ID verification needed to make Companies House filings

Companies House is expected in 2026 to move to a verified‑filer model, so only identity‑verified officers/employees or Authorised Corporate Service Providers can file. Identity verification is already mandatory for new directors and persons with significant control (PSCs), with a transition period for existing individuals, so companies should complete onboarding and ensure any agents are authorised corporate service provider (ACSPs). This is expected to commence in early 2026.

Further ID verification requirements are expected to be commenced during 2026, including verification of relevant officers of corporate PSCs, the natural‑person directors of any permitted corporate directors, and, as part of limited‑partnership reform, verification of general partners; precise 2026 start dates depend on secondary legislation.

Separately, the transitional ID verification for existing individual directors and PSCs runs through 2026 even though the regime started in November 2025: existing directors must verify by the date of the first confirmation statement due after 18 November 2025, and existing PSCs who are not directors must verify within the first 14 days of their month of birth in 2026. 

Corporate directors

Restrictions on corporate directors are expected to commence in 2026 with a transition, permitting only UK corporate directors whose own boards are all verified natural persons. 

Internal controls declaration (UK Corporate Governance Code)

For periods beginning on or after 1 January 2026, boards of premium listed companies must report how they monitored controls and declare the effectiveness of material controls at the year end, explaining any deficiencies and remediation. The first such statements will appear in 2027 annual reports for December 2026 year ends, so 2026 evidence-gathering is critical.

Supplier payment practices in the directors’ report

Large companies will need to include an annual narrative on payment practices and performance for financial years beginning on or after 1 January 2026, complementing the existing portal returns. Finance and audit teams should build this into 2026 reporting plans.

Public offers and admissions

The new UK regime for public offers and admissions to trading goes live on 19 January 2026, resetting prospectus triggers, content and forward‑looking statements. Issuers planning 2026 fundraisings should align approvals, disclosure controls and timetables to the new rulebook.

Corporate redomiciliation

The government has indicated an intention to consult on an in‑and‑out UK corporate migration regime; a bill in 2026 would be the first concrete step, with commencement later. Tax, accounting and creditor‑protection design will drive timing.

Digitisation of ownership

Proposals to end paper share certificates, strengthen rights in intermediated chains and move to default digital payments are intended to be legislated this Parliament, with abolition of paper certificates targeted by end‑2027. We expect enabling legislation to start progressing in 2026.

Non-financial reporting and virtual AGMs

The government plans to consult on simplifying non‑financial reporting, removing redundant requirements, uplifting company‑size thresholds and examining the legal framework for virtual AGMs. 2026 is likely to be a consultation year, with staged implementation thereafter.

Data law 

Data (Use and Access) Act 2025

Early 2026 is expected to see the commencement of the main changes to data protection and privacy legislation set out in Part 5 of the Data (Use and Access) Act 2025 (DUA Act).

These reforms are expected to come into effect in early 2026, approximately six months after Royal Assent. These reforms include changes to the UK GDPR in relation to lawfulness of processing (including bringing in the new "recognised legitimate interest" lawful basis and the addition of certain processing purposes more likely to amount to "legitimate interests"), the subtle relaxation of current restrictions on automated decision making, the expansion of the soft opt-in for charities, and the new exceptions in relation to the use of cookies and other tracking technologies.

However, section 103 of Part 5, which requires controllers to establish formal processes for handling data protection complaints, will not take effect until summer 2026. Organisations will be obliged to provide data subjects with a way of making data protection complaints; acknowledge receipt of complaints within 30 days; and investigate complaints without undue delay.

Changes to the Information Commissioner's Office governance structures under Part 6 are also expected in early 2026, once members of the Information Commission's new board have been appointed. 

Simplification

In November 2025, the European Commission unveiled its Digital Omnibus Regulation proposal, as part of its digital simplification package. The proposals include amendments to the GDPR and other data legislation as well as amendments to the EU AI Act (see Artificial Intelligence).

From a data perspective, key proposals include amendments to the definition of "personal data" under the GDPR, additional exemptions from the prohibition on processing special category data, extension of the notification deadline for breach reporting from 72 to 96 hours for controllers, moving rules on processing personal data via cookies and other tracking techniques from the ePrivacy Directive into the GDPR framework, and introducing consent exemptions for some low-risk cookie uses. For details, see Osborne Clarke's Digital Omnibus microsite.

The legislative process is now under way, with trilogue negotiations among the EU institutions expected in mid-2026. 

Digital regulation 

Online safety

Protecting users from online harms, particularly children, will be a regulatory priority in 2026, certainly in the UK and foreseeably in the EU as well.

In the UK, Ofcom has begun to enforce the Online Safety Act 2023, focusing primarily on protecting children from illegal and harmful content. Providers of pornographic content were required to protect children from encountering such content from 17 January 2025 and all providers of services likely to be accessed by children were required to implement measures set out in the Protection of Children Codes of Practice by 25 July 2025. Once these duties were effective, Ofcom began immediately to take action against service providers causing the most egregious harm by launching enforcement programmes on protecting children from adult content via age assurance, preventing users from encountering or sharing child sexual abuse material, and monitoring compliance with children's risk assessment and illegal content risk assessment duties.

In October 2025, Ofcom issued its first penalty of £20,000 under the Act to an online discussion board for failing to provide requested information. In November 2025, an adult content site was fined £50,000 and in December 2025, Ofcom issued a significantly higher fine of £1 million against another adult content provider for not having robust age checks in place. Further enforcement action is expected in 2026, particularly as regards protecting children, which remains Ofcom's top priority and is a "non-negotiable requirement for service providers".

Ofcom has said that services that are most used by children must be transparent about their child safety measures and make timely improvements where needed, focusing on risks associated with personalised feeds. Tackling child sexual abuse material and grooming beyond file-sharing and file-storage services is also among Ofcom's priorities for 2026, as is more effective removal of illegal content and making the online world safer for women and girls.

In the EU, the European Commission published guidelines on the protection of minors under Article 28 of the Digital Services Act in 2025. While not legally binding, these guidelines will act as a benchmark for compliance and platforms should use them in their efforts to make their services safer in 2026.

While there are calls in both the EU and the UK for regulators to go further to protect children online (and in the UK, Ofcom is due to introduce additional safety measures to its codes in 2026/27, including to improve child protection during livestreams), it remains to be seen whether those calls result in any significant action to strengthen existing rules. 

Consumers in the digital world

In the UK, 2026 is expected to see the new regime for paid business-to-consumer subscription contracts under the Digital Markets, Competition and Consumers Act 2024 (DMCCA) come into effect.

The regime on unfair commercial practices under the DMCCA, including rules on pricing and the ban on fake reviews, are now fully in effect, supported by guidance from the Competition and Markets Authority (CMA). The CMA's new direct enforcement powers are also fully in effect and the regulator has already launched various investigations into potentially non-compliant businesses, signalling its readiness to use its new powers. It has also sent advisory letters and requests for information to businesses in a variety of sectors, showing that its aim is also, where possible, to work with companies and encourage compliance, rather than move straight to enforcement. Businesses should anticipate more market sweeps and targeted action throughout 2026 where the CMA considers that standards are falling short.

The new subscriptions regime under the DMCCA was originally scheduled to come into effect in spring 2026, but this has now been delayed to autumn 2026 at the earliest. The new regime will introduce stricter requirements for pre-contract information, clearer presentation of key terms, mandatory renewal reminders, additional "cooling-off" rights and enhanced cancellation and termination rights for consumers.

In the EU, the much-anticipated legislative proposal for the Digital Fairness Act is expected to be published by the end of 2026. The notion of an Act on digital fairness was born out of the results of the consumer fitness check, published in 2024, which found gaps in consumer law when it comes to the online world. The Act is likely to address issues such as the use of dark patterns, addictive design, opaque influencer marketing, unfair personalisation practices and contract terms.

Simplification 

In November 2025, the European Commission published its Digital Omnibus Regulation proposal, as part of its digital simplification package. The proposals include changes to the GDPR and other data legislation as well as amendments to the EU AI Act. Further proposals to simplify other areas of the EU's digital rulebook are expected in 2026 as part of the overall simplification package.

The Commission also published a call for evidence and a consultation on a "digital fitness check", which will close on 11 March 2026. It is seeking to understand how EU digital rules interact and stress-test their efficiency and effectiveness. The aim is to complete the final evaluation in Q1 2027. Following this general consultation, there will be additional consultation exercises, focusing on specific issues and looking more in depth at the interplay between certain rules that have simplification potential, especially in relation to SMEs.

The Digital Fairness Act is also expected to have a simplification focus – the consultation sought views on reducing market fragmentation and legal uncertainty, as well as simplification in relation to, for example, certain consumer information requirements in repeated transactions with the same trader (such as in-app purchases) and the consumer's right of withdrawal in respect of certain subscription services.

Cyber Security and Resilience Bill

The UK's Cyber Security and Resilience (Network and Information Systems) Bill was presented to Parliament on 12 November 2025. It amends and extends the UK NIS Regulations, in a significant overhaul of the UK's cybersecurity framework. The scope has been widened to cover managed service providers, data centres, large load controllers and designated "critical suppliers".

All regulated entities face enhanced incident reporting obligations and more prescriptive security duties, including duties on entities to manage supply chain cyber risk. The government is expected to consult on implementation proposals including incident reporting thresholds this year. See this Insight on the changes the bill proposes.

See Osborne Clarke's Digital Regulation Timeline for more on UK and EU digital laws. 

Employee incentives 

Upcoming expansion of EMI 

Companies will be planning ahead and considering their remuneration strategies, particularly in light of the significant expansion of the Enterprise Management Incentive (EMI) regime announced at the Budget 2025. For EMI option contracts granted on or after 6 April 2026, the following limits are to be increased:

• the employee limit (from 250 to 500);

• the gross assets test (from £30 million to £120 million); and

• the total value of shares under EMI option (from £3 million to £6 million).

These changes will significantly extend the number of companies that will be able to take advantage of EMI. Companies that previously did not qualify (or that have grown too big) for EMI will be considering these and the other important tests to assess whether they are likely to be eligible from 6 April 2026.

In addition, the maximum holding period of an EMI option is to be increased from 10 years to 15 years, again from 6 April 2026. Companies wishing to vary existing EMI contracts to extend the term will need to ensure that the legislative requirements are met for tax relief to be available. Similarly, companies wishing to amend existing EMI and company share option plan option contracts to introduce sale on a Private Intermittent Securities and Capital Exchange System (PISCES) platform as an exercise event will need to ensure that they meet the applicable legislative requirements.

Further support for scale-up businesses ahead?

The call for evidence seeking views on the effectiveness of tax incentives and the wider tax system for entrepreneurs and scaling firms closes on 28 February 2026. It will be interesting to see what further changes flow from this, following on from the increases in the EMI, Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS) limits announced at the Budget 2025.

Employee ownership trusts – guidance on CGT relief expected

A less welcome change announced at the Budget 2025 was the reduction in the capital gains tax (CGT) relief available on qualifying disposals to Employee Ownership Trusts (EOTs), from 100% of the gain to 50% from 26 November 2025.

It is expected that HMRC will update its guidance to clarify how the relief will work and how CGT is paid in practice (including payment by instalments) in the context of EOT transactions. In comparison to other routes, EOTs remain a tax efficient way for shareholders to pass their business to employees while ensuring that the employee-ethos and culture remains.

Employment law 

2026 promises to be transformative for employers. After the Employment Rights Act 2025 received royal assent on 18 December, the focus now shifts to practical implementation. While the first reforms come into force in April 2026, employers will need to be actively preparing for the changes taking effect later in 2026 and into 2027, including the move to a six-month qualifying period and the removal of the compensation cap for unfair dismissal claims. Beyond legislative compliance, employers face strategic challenges around agency worker reforms and how the unfair dismissal reforms will affect this group, non-compete restrictions, managing increased litigation and severance costs, as well as balancing wider business transformations driven by AI.

April 2026: sick pay, family leave and collective consultation

On 6 April, statutory sick pay becomes payable from day one of absence, with no lower earnings limit. Combined with rising minimum wage costs and employer national insurance contributions, this increases the already significant cost pressures on employers. From this date, statutory paternity and unpaid parental leave become day-one rights.

Of particular significance for employers engaging in statutory collective consultation on redundancies, where there is a breach, the maximum protective award which can be awarded will double to 180 days' pay per employee. Simplified trade union recognition processes and electronic and workplace balloting provisions will also come into force.

Key actions include factoring sick pay costs into budgets, revising sickness and family leave policies and reviewing collective redundancy processes for compliance in light of the increased risks.

October 2026: harassment, time limits, and fire and rehire

October 2026 is set to see the time limits for bringing an employment tribunal claim extend from three to six months in almost all cases. The existing sexual harassment prevention duty (which came into force in October 2024) will also be strengthened to require employers to take "all reasonable steps" and third-party harassment protections will be brought into force.

Employers looking to change terms and conditions of employment will also need to get up to speed with new rules governing the use of "dismissal and re-engagement" (or fire and rehire) to effect the change. For particular variations, such dismissals will now be automatically unfair unless an organisation manages to meet the very narrow exception on business viability. A new duty to inform workers of their right to join a trade union also comes into force.

Key actions include ensuring robust processes around harassment risk assessments and related policies, including mental health and psychological safety concerns. Extra care will also be needed on any proposal to change terms and conditions given the tightening of the laws in this area. 

January 2027 and beyond: unfair dismissal reforms and other changes

The Employment Rights Act contains many further reforms which we understand are due to come into force in April or October 2027. However, one outlier is the reform to unfair dismissal laws which are currently set to take effect from 1 January 2027. Following last minute negotiations to get the Act passed, the existing two-year qualifying period for an unfair dismissal claim will reduce to six months and the compensation cap will be removed. A senior executive on £500,000 could recover far more in an unfair dismissal claim than the previous £118,223 cap. Employers will also need to factor in the ability for an Employment Tribunal to apply a 25% adjustment to an award where there has been a breach of the Acas code of conduct on disciplinary and grievance procedures.

Key actions include looking now at robust probationary processes to align with the six-month threshold and strengthening performance management, particularly for senior roles. Employers will also need to review their termination strategies, particularly senior executives and other high-earning employees.

Consultations shaping the employment landscape

2026 is set to be a year where the government has indicated that it will be publishing a significant number of consultations on the measures to be introduced under the Act, together with reviews into how other areas of employment law not addressed specifically in the new legislation are operating. The expansion of pay reporting to ethnicity and disability, as well as strengthening discrimination protection around equal pay and combined discrimination, are also currently under active consideration and will require careful monitoring by employers.

Of significant interest to employers will also be the government's working paper seeking views on reforms to non-compete clauses (closing 18 February 2026). The paper highlights how non-compete provisions can restrict employee movement, limit knowledge transfer and undermine innovation. Options for reform include: statutory time limits (potentially varying by company size – three months for 250+ employees, six months for smaller firms); outright bans; bans below salary thresholds to protect lower-paid workers; or combining salary threshold bans with three-month limits for higher earners. As part of its considerations, the government is examining international approaches, as well as whether high legal costs deter employees from challenging restrictive covenants that are in place.

It is not clear yet what the government's timescale for legal reform might be (should this be an outcome from its review), but employers should take the opportunity now to review existing non-competes and consider alternative  protections, such as non-solicitation clauses, confidentiality provisions and garden leave arrangements. 

Energy

Nuclear energy renaissance

The UK's  nuclear sector will see major legal changes in 2026. New planning policy (EN-7) will provide the first dedicated policy support for Small Modular Reactors and Advanced Modular Reactors within the Nationally Significant Infrastructure Planning (NSIP) regime, alongside a government framework for privately funded nuclear projects. Additionally, nuclear energy can now be funded through the recent UK Green Financing Programme that opens up investment opportunities. The faster licensing processes and fixed decision deadlines will speed up project delivery. Overall, the sector expects more work involving project finance, consenting, construction, environmental and regulatory compliance matters.

Reformed national pricing and the strategic spatial energy plan

After rejecting zonal pricing, the government will publish the first Strategic Spatial Energy Plan by the end of 2026. This will change how energy infrastructure is planned and located across Britain. It will lead to reforms of transmission charges and connection fees, with the government likely to pass new laws to speed up these changes. The reforms aim to make network charges more predictable and give clearer signals about where to build energy projects. Updates on grid connection strategies and navigating the new pricing scheme are therefore expected.

Data centres and energy infrastructure

UK data centre electricity demand is projected to reach 9% of total consumption by 2035, up from 2.6% today. In 2026, securing grid connections will be a crucial challenge as National Grid expects to connect 19GW of new capacity by 2031, half from data centres. Ofgem's connection reforms will introduce enforceable milestones and financial penalties for delays. The government's AI Growth Zones offer accelerated planning and reduced connection times by up to five years. Despite regulatory uncertainty around co-location arrangements with power generation facilities, the sector presents opportunities in project development, regulatory compliance and energy infrastructure financing.

ESG

EUDR enforcement delayed to end of 2026

The EU Deforestation Regulation, originally due to apply from 30 December 2025, has been delayed by 12 months to 30 December 2026 for large operators (until 30 June 2027 for micro and small operators) following concerns about implementation challenges. Alongside the delay, simplified measures have been introduced including exclusion of printed materials from scope and streamlined declarations for smaller operators. The Commission is required to report by 30 April 2026 on further simplification, so businesses should anticipate additional amendments during the year while ensuring they are prepared for the regulations to come into force.

Major scaling back of CSRD and CSDDD agreed

Provisional agreement was reached in December 2025 to significantly narrow the scope of both the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD). CSRD thresholds have increased to 1,000 employees and €450m turnover (from 250 employees and €50m), while CSDDD application has been postponed to July 2029 and limited to companies with over 5,000 employees and €1.5bn turnover. Many businesses preparing for compliance can reassess their obligations, though those remaining in scope will need to ensure they are prepared for these updated reporting obligations.

CBAM transitional phase ends and UK scheme launch confirmed

The EU Carbon Border Adjustment Mechanism's transitional reporting phase ended on 31 December 2025, with declarants required to purchase CBAM certificates from 1 February 2027 to cover embedded emissions from 2026 imports and businesses required to register with the national CBAM authority from 1 January 2026. The Commission has also proposed expanding CBAM's scope to cover approximately 180 downstream steel and aluminium products with enhanced anti-circumvention measures.

In parallel, the UK's CBAM will commence on 1 January 2027, though indirect emissions will not be included until 2029 at the earliest. HMRC is expected to publish draft secondary legislation for consultation in early 2026, with businesses needing to prepare for dual compliance if operating across both jurisdictions.

Financial services 

In 2026, the primary impact on firms in the financial services sector will be policy initiatives that take forward the government's 2024 plans for financial services, as set out in the white paper Financing Growth, acknowledging the vital role the sector plays in the UK economy.

The growth agenda will be taken forward by the regulators, driving a simplification of existing regulations and obligations.

The Financial Conduct Authority (FCA) has included in its five-year strategy, annual work programme for next year a long list of consultation papers, policy statements and announcements – all heavily cloaked in the language of lifting the regulatory burden on firms, taking a more flexible approach to supervision and doing what the regulator can to encourage growth.

For private fund managers in 2026, a new regime is expected to be introduced to avoid significant burdens suddenly being imposed on firms, so-called “cliff-edge” regulation. The taxonomy of what rules apply to which fund managers will be reordered. This will be combined with new powers for the FCA to set more dynamic thresholds, as well as determining which rules apply to different fund managers. The smaller firms are, the fewer obligations will apply. While the proposals will usher in less prescriptive regulation for many firms, how to comply will be a more complex assessment, and some smaller firms will need regulatory authorisation.

In 2026, the Prudential Regulation Authority's growth agenda includes making adjustments to capital requirements to support small and medium-sized enterprises and infrastructure lending, improving the handling of authorisation applications, and reviewing the Senior Managers and Certification Regime alongside the FCA and HM Treasury.

Firms can find the latest information about when each workstream will be implemented in an updated version of the Regulatory Initiatives Grid.

Food law

UK-EU SPS agreement negotiations begin with 2027 target

Following agreement at the May 2025 summit, on 13 November the European Council authorised the Commission to open negotiations with the UK for a sanitary and phytosanitary agreement, with the UK cabinet office minister wanting it in place for 2027.

Since Brexit, exports to the EU are down 21% and imports down 7% (2018-2024), with many food businesses having scaled back or stopped trading due to increased costs, paperwork and border delays. Key issues to be resolved include UK payment for participation in EU programmes and EU concerns around implementation of checks on goods to Northern Ireland. If concluded, the agreement will eliminate Export Health Certificates, plant health certificates and routine border checks, while restoring EU market access for products such as fresh sausages, certain shellfish and seed potatoes. However, the UK would be required to align with EU food safety standards, creating uncertainty around interaction with the newly in force UK precision breeding regulations.  

FSA to present proposals for national food regulation system in March

Following the budget announcement, the Foods Standards Agency has been asked by the government to develop a new national level food regulation system for large food businesses in England, with proposals to be presented to its board in March 2026. This follows a year-long trial with major retailers and represents a fundamental shift from local authority inspections to a national system using company-generated data to identify and address food safety risks across entire businesses more quickly. While the system will include "some checks on the ground" and free up local authority teams to focus on smaller establishments, concerns have been raised that it could allow supermarkets to police themselves. 

PFAS restrictions in food contact materials take effect in the EU in August

Under the EU Packaging and Packaging Waste Regulation, from 12 August 2026, food contact packaging will be banned if it contains per- and polyfluoroalkyl substances (PFAS) at or above 25 parts per billion for any PFAS, 250 parts per billion for sum of PFAS, or 50 parts per million for PFAS including polymeric PFAS.

Businesses should obtain PFAS testing information from suppliers and may need to explore alternative materials if PFAS is detected. While the August ban only affects food contact packaging, the European Chemical Agency (ECHA) has proposed a ban on more than 10,000 PFAS substances for all consumer goods, with the Committee for Risk Assessment and Committee for Socio-Economic Analysis due to issue its opinion to the European Commission by the end of 2026. By 31 December 2026, the Commission will prepare a report on substances of concern in packaging to determine impacts on reuse, recycling and chemical safety.

Immigration

Changes to right to work checks 

The UK government launched a six-week consultation (29 October to 10 December 2025) on extending right to work checks to a wider part of the labour market, including the gig economy and zero-hours workers. Currently, employers are only required to conduct right to work checks for individuals classified as "employees", leaving significant gaps in sectors such as construction, food delivery, beauty salons, courier services and warehousing where businesses engage workers, individual sub-contractors, or use online matching services.

The proposed extension is to be implemented through the Border Security, Asylum and Immigration Act (which received royal assent on 2 December 2025 and is expected to come into force in 2026-27). It will require all businesses engaging individuals under worker's contracts, sub-contractors and online platforms to carry out right to work checks, with civil and criminal sanctions for non-compliance.

These changes will affect most, if not all, UK companies.

Changes to the settlement route following closure of the consultation

Under the proposed system, the baseline qualifying period for settlement will increase from five to ten years for most migrants, with adjustments based on four core pillars: character, integration, contribution, and residence. Applicants must demonstrate sustained economic participation through earnings above £12,570 for three to five years, achieve English language proficiency at B2 level, pass the Life in the UK test, maintain a clean criminal record, and have no outstanding government debt. The government will conduct a root-and-branch review of criminality thresholds, with the expectation that settlement should not be available to those with criminal records.

The system introduces a "time adjustment" model allowing migrants to reduce their qualifying period through exceptional contributions. High earners with taxable income exceeding £125,140 for three years could reduce their pathway by seven years, whilst those earning above £50,270 could earn a five-year reduction. Public service workers in skilled occupations (RQF Level 6 or above), including medical and teaching professionals, could also qualify for a five-year reduction.

Conversely, the qualifying period will be extended for those claiming public funds—by five years for less than 12 months of claims, and ten years for more extensive benefit usage. The consultation also proposes that benefits should be reserved for British citizens rather than those with settled status, and considers a separate 15-year baseline qualifying period specifically for low-skilled, low-wage Health and Care visa holders who arrived with non-working dependants.

Our dedicated tracker is regularly updated, with key dates flagged.

Intellectual property 

This year will again be active for intellectual property, with AI and IP issues to remain at the forefront, continued developments in the standard essential patent (SEP) licensing context, progression of the Unified Patent Court's (UPC) jurisprudence, and design law reform on the agenda in both the UK and EU.

Jurisdictional issues are likely to continue to be prominent this year with the developing response to the Court of Justice of the EU (CJEU)’s ruling in BSH v Electrolux. While this will continue to reshape cross-border European patent litigation strategies and remedies, it could also be applied in the context of other IP rights.

The UPC has actively embraced the CJEU's approach in BSH, which broke the link requiring infringement and validity issues to be heard together. The UPC has been prepared to issue inter partes validity findings in respect of foreign patents and granted preliminary and final injunctions extending beyond UPC territories. It has also claimed jurisdiction over third-state infringements and foreign defendants through creative use of anchor defendants. We have started to see the German national courts also embracing the BSH approach and it is possible that this year will see other EU Member States doing the same.

Jurisdictional and comity tensions prominently arose at the end of 2025 in SEP licensing disputes, with various forms of anti-suit relief being sought in the UPC, German and English courts. Whether judicial de-escalation attempts are successful remains to be seen.

In the UK, key appeals will be heard by the Supreme Court in Apple v Optis and Tesla v InterDigital & Avanci (Osborne Clarke is acting in both) and (F)RAND trials will also be heard in Samsung v ZTE and InterDigital v Amazon. There might also be policy change, with a government response to its SEP consultation expected this year. The European Parliament’s action to annul the Commission’s withdrawal of the draft EU SEP Regulation may add pressure for a recast proposal.

In life sciences, the EU’s pharma package proposes changes to the data and market exclusivities framework for pharmaceutical products and looks to extend the Bolar exemption, which could lead to generics and biosimilars being able to enter the market earlier than under the current rules.

On the other hand, the EU Biotech Act is looking to incentivise biotech innovation in the EU, by, among other measures, a proposal for a 12‑month supplementary protection certificate (SPC) extension. Separately, the Commission’s review of the SPC manufacturing waiver is expected to move forward this year.

For trade marks, the start of the year saw the fifth anniversary of the end of the Brexit transition period, which could bring more UK non‑use challenges to “cloned” marks. Attempts to "evergreen" trade marks to avoid non-use requirements might bring bad faith challenges. The Supreme Court’s endorsement of post‑sale confusion may embolden actions against lookalikes.

On designs, key provisions of the new EU designs regulation will take effect from July 2026, and the UK’s sweeping consultation points to possible reforms and potential EU-UK divergence.

The AI and IP interface will feature prominently. In the UK, the government intends to issue a response to its AI and copyright consultation by March 2026, and the Court of Appeal hearing in Getty Images v Stability AI is expected. There could also be an appeal in Germany in the GEMA v OpenAI litigation.

For more detail on patent litigation developments in Europe, see our Insight.

Life sciences and healthcare

AI, data and digital health

Digital, liability and cybersecurity frameworks will materially shape business operations in 2026. Core obligations under the EU AI Act phase in by August 2026 with timeline adjustments under the new Digital Omnibus. Later in the year, the new Product Liability Directive is expected to expand liability exposures for software and AI, with increased risk of cross-border class actions for medical device and pharmaceutical manufacturers and suppliers.

The UK government's life sciences sector and NHS 10-year health plans set out a series of commitments in relation to AI, data and digital health, with several listed to be actioned in 2026 including accelerating access to health data for research, surgical robot adoption, an AI research screening platform and Innovator Passports.  

The Medicines and Healthcare products Regulatory Agency (MHRA)'s National Commission is also set to publish a new framework for AI this year following the launch of a call for evidence on 18 December 2025 (closing 2 February 2026). It seeks input on whether the adequacy of the UK's current framework for regulating AI in healthcare, how it might be enhanced to ensure rapid access to safe and effective AI medical devices, appropriate methods for monitoring safety, and how responsibility and liability should be allocated among parties involved in AI medical device implementation. 

New EU Biotech Act

The EU is advancing a comprehensive legislative agenda through its new Health Package, spearheaded by the first phase of the long-awaited proposed Biotech Act, targeted simplifications to the Medical Devices Regulation (MDR) and In Vitro Diagnostic Regulation (IVDR), and a Safe Hearts Plan. The aim is to strengthen innovation, regulatory efficiency and health outcomes.  

Clinical trials

The EU Biotech Act proposes amendments to the EU Clinical Trials Regulation to improve and accelerate clinical trial procedures, alongside the launch of FAST-EU (Facilitating and Accelerating Strategic Trials) in January 2026 (which aims to accelerate multinational trial evaluations through coordinated and faster review processes). Parallel activities by the EU Health Technology Assessment Coordination Group through its 2026 Work Programme will launch joint clinical assessments for medicines and high-risk devices and issue new guidance. 

The UK will see a new clinical trials regime become effective from April 2026, modernising approvals and reporting. A reduction in commercial clinical trial times to less than 150 days is also expected by March 2026. (See also products section, below.)

Medical devices

In the UK, the MHRA is expected to introduce new statutory instruments for medical devices as part of its reforms to the medical device regulatory framework. A pre-market statutory instrument for medical devices, incorporating an International Reliance Framework, is expected to be introduced to Parliament by Autumn 2026.  

The European Commission's draft regulation, published as part of the Health Package, proposes targeted simplification of the MDR and IVDR. Key measures including reduced administrative burdens, more proportionate and targeted requirements for conformity assessment procedures, enhanced legal certainty, predictability and cost-efficiency of device certification, increased digitalisation for product documentation and improved coordination and cooperation at EU and international level.

Pensions 

Spring 2026 should bring royal assent for the Pension Schemes Bill. Following amendment at report stage in December 2025, the clauses introduced to help schemes address issues arising from the Court of Appeal’s decision in Virgin Media Ltd v NTL Pension Trustees II Limited & Ors will take effect as soon as the bill becomes law. Supporting guidance for scheme actuaries considering requests for actuarial confirmation, and a High Court judgment in a related case, are both expected.

2026 should also bring consultations on draft regulations to support the defined benefit (DB) surplus provisions (including confirmation of the funding threshold for surplus extraction) and the DB superfund provisions. It should further bring a draft of the legislation that will allow well-funded DB schemes to pay surplus funds directly to members over the normal minimum pension age from April 2027.

For defined contribution (DC) schemes, the Pensions Regulator and the Financial Conduct Authority (FCA) are likely to consult jointly on refinements to the value for money framework at the start of 2026, and the year is likely to bring sight of regulations and FCA rules to support both the new value for money and guided retirement reforms. Reform in the area of the administration levy and PPF levy should help reduce levy costs.

The Pensions Commission is expected to publish its interim report for phase two of the government’s pensions review in the spring. Phase two considers the long-term future of the UK pensions system and how to support pensions adequacy. Although the final report is not due until 2027, the interim report should give some indication of the direction of travel and possible areas of reform. This may include extension of automatic enrolment, increases to minimum contributions and/or further changes to pensions tax. Employers and trustees will already be following the progress of the Finance (No. 2) Bill and HMRC materials as they prepare for the April 2027 change to the inheritance tax treatment of unused DC pots and certain lump sum death benefits, and the progress of the National Insurance Contributions (Employer Pensions Contributions) Bill which will be the source of the cap on the national insurance exemption for salary sacrificed for pensions contributions from April 2029.

2026 is also expected to be an important year for collective defined contribution (CDC) schemes. The Pensions Regulator is consulting on a revised CDC scheme code of practice to include provision for the authorisation and supervision of unconnected multiple-employer (UME) CDC schemes and sections. If the necessary regulations and updated code can be brought into force in time, it may be possible for the first UME CDC schemes to apply to the regulator for authorisation in summer 2026. This is important because UME schemes might include, for example, new CDC master trusts or the addition of a CDC section to an existing DC master trust. Mid-2026 might also bring a consultation on draft regulations to enable retirement (new “pensioner only”) CDC schemes or sections. Both sets of changes have the potential to create additional pension options for employers.

Businesses need to understand how all of these developments affect them and the pension schemes they offer to their workforce, and take action where needed. 

Procurement 

The Procurement Act 2023, which came into force in February 2025, enters a critical phase in 2026 as the first court decisions interpreting the new regime are anticipated from spring.

The most highly anticipated judgments will address applications to lift the automatic suspension, where the court must now apply a new statutory test rather than the American Cyanamid principles used under previous legislation. How courts interpret and apply that new test will be subject to considerable scrutiny, providing crucial guidance for contracting authorities and suppliers navigating the reformed landscape.

From 1 January 2026, contracting authorities must publish payment compliance notices and contract performance notices, with the first reporting period running from 1 October 2025 to 31 March 2026 and notices due by 30 April 2026. The new debarment regime is also anticipated to result in some suppliers being added to the Debarment List during the course of this year, and the government is known to be investigating cladding suppliers named in the Grenfell Inquiry Report for possible inclusion on the Debarment List. 

Finally, the Cabinet Office's response to its June 2025 consultation on further reforms aimed at strengthening economic resilience and supporting small and medium enterprises and voluntary community and social enterprises is expected to be published in 2026, with any proposals progressing through Parliament as amendments to the Procurement Act 2023.

Products

EU Product Liability Directive transposition deadline approaches

The Product Liability Directive entered into force on 8 December 2024, with EU Member States required to transpose it into national law by 9 December 2026. The revised directive expands coverage to digital products, AI systems and software, while clarifying that online platforms can be liable when acting as economic operators.

Businesses should monitor national implementation measures throughout 2026 to understand how different Member States interpret the new liability framework. In parallel, the UK Law Commission is consulting on product liability reform, with formal public consultation on reform proposals planned for the second half of 2026, presenting an opportunity for UK businesses to influence modernised liability regime development.

Clinical trials regulations come into force in April

On 28 April 2026, the Medicines for Human Use (Clinical Trials) (Amendment) Regulations 2025 come into force, designed to protect trial participants, strengthen patient safety, and accelerate approvals by reducing unnecessary burdens. The latest international Good Clinical Practice guidelines (ICH-GCP E6(R3)) will be implemented alongside the updated regulations, with all trials needing to adhere to GCP principles. The Medicines and Healthcare products Regulatory Agency (MHRA) and Health Research Authority published draft guidance in October 2025, with the MHRA planning to publish draft GCP guidance in January and updates to the Modification of an Important Detail process in March 2026. Sponsors and researchers should ensure policies, processes, procedures and systems are updated ahead of the April deadline. (See also Life sciences and healthcare section, above.)

ESPR prohibition on destroying unsold products takes effect

From 19 July 2026, the Ecodesign for Sustainable Products Regulation (ESPR) prohibits the destruction of certain unsold products, applying to apparel and footwear including items made of leather, knitted or crocheted items, hats and headgear, and various types of footwear. The prohibition aims to reduce waste and encourage donation, reuse or recycling, with exemptions for products unsafe due to health concerns, damaged beyond repair, or where destruction has the least environmental impact. The exemptions are be confirmed by delegated legislation which is currently being produced by the European Commission. Medium-sized enterprises must comply with the ban from 19 July 2030, while micro and small enterprises are currently exempt.

As well as the ban on destroying unsold consumer goods, the ESPR also introduces reporting obligations which applies to all types of consumer goods. Reports are to be published annually and made publicly available on businesses' websites and need to include the number and weight of products discarded, as well as the reasons for doing so.

The Commission is also expected to develop delegated acts in 2026 expanding ecodesign requirements to additional product categories.

In 2026, businesses should prepare for the ban by implementing systems to prevent the destruction of unsold clothing and footwear, and by preparing and publishing reports to meet the new disclosure requirements.

Real estate, planning and construction  in England

Significant reforms affecting English real estate are expected this year. Among the anticipated changes covered in our Insight: What does 2026 hold for the real estate sector in England?, the following are likely to have a particular impact.

Commercial 

Proposals to ban upwards-only rent reviews in new commercial leases appeared in the English Devolution and Community Empowerment Bill without prior consultation, and are expected to become law later in 2026 or 2027. The ban may drive the market towards fixed rental increases or alternative rent structures or even deter existing tenants from subletting, as it risks creating a mismatch between rents received and payable.

The Law Commission's review of the security of tenure regime is under way, with a second consultation expected shortly, exploring potential reforms to modernise processes for statutory renewals and possession under the Landlord and Tenant Act 1954. Anticipated changes include increasing the minimum lease term for statutory rights to two years and clarification of landlord grounds for opposing renewal.

The Landlord and Tenant (Covenants) Act 1995 is set to be reviewed under the Law Commission's 14th Programme of Reform, with hopes that restrictions on tenants assigning to their guarantors will be addressed. The programme will also consider rights of first refusal under the Landlord and Tenant Act 1987 and the law governing maintenance, repair and upgrading of leased commercial buildings.

From April 2026, business rates will change following revaluation and the introduction of new multipliers, with retail, hospitality and leisure properties receiving a 5p discount while properties valued at £500,000 or more will face a higher multiplier of 2.8p above standard. The government is also seeking views on broader reforms, including moving to a "slice" tax structure, various relief schemes, and the antecedent valuation date gap

Residential

Phased implementation of the Renters' Rights Act 2025 will begin from May 2026. This will bring substantial reforms to the private rented sector in England, including the abolition of assured shorthold tenancies and section 21 "no fault" evictions, revised possession grounds, and restrictions on annual rent increases. The rollout of the PRS Landlord database and ombudsman scheme is expected to begin by the end of the year.

Leasehold enfranchisement reforms under the Leasehold and Freehold Reform Act 2024 may gather momentum in 2026, following the High Court's rejection of a legal challenge to proposed changes that could reduce landlord compensation and cost recovery on enfranchisement, as well as the proposed cap on ground rents. Further leasehold reforms are anticipated, including measures to enhance transparency and fairness in estate management and government proposals to reinvigorate commonhold as the default tenure for new flats, with the draft Leasehold and Commonhold Reform Bill awaited.

Housebuilders will also need to familiarise themselves with the new suite of building standards for residential development, including the Future Homes and Buildings Standard which is expected to be published shortly. 

Building safety

Those involved in the construction of higher-risk buildings will continue to monitor how the Building Safety Regulator (BSR) is dealing with applications relating to them. Delays in assessing and approving Gateway 2 applications have caused significant disruption in the industry since the introduction of the higher-risk buildings regime. Though the regulator has acknowledged the problem and has taken steps to improve the process, stakeholders will watch with interest whether the BSR is able to meet its self-imposed deadlines to improve the higher-risk buildings approvals process, such as clearing the legacy Gateway 2 backlog by the end of January 2026.

On 27 January 2026, the BSR is transitioning from the Health and Safety Executive to a new arm's-length public body under the Ministry of Housing, Communities and Local Government. The government also intends to introduce a licensing scheme for principal contractors for higher-risk buildings under the building regulations, which was recommended by the Grenfell Tower Inquiry. It is also considering whether additional licensing requirements for others within the industry is appropriate, and intends to publish a call for evidence on the proposals in spring 2026.

The Welsh government released a series of new regulations at the end of 2025 which will introduce a number of changes to the building control system in Wales on 1 July 2026. These changes include the introduction of dutyholder obligations which apply to all works covered by building regulations and a new regime which will apply to works carried out in relation to higher-risk buildings. These new regimes are similar, though not identical, to their English counterparts (which have been in place since 2023).

Developers will face the new Building Safety Levy from October 2026, imposing significant additional costs for projects in England with residential dwellings or purpose-built student accommodation bedspaces. The Remediation Bill may also be published, imposing a legal duty to remediate defective buildings within fixed timescales, with potential criminal prosecutions for non-compliance. From 30 September 2026, new residential buildings over 18 metres in height will require a minimum of two staircases, impacting building designs, costs and potentially affecting scheme profitability.

The New Year also brings various key building safety cases to the appellate courts including the awaited Court of Appeal decision in Almacanter Centre Point v De Valk and the Supreme Court rulings on Triathlon Homes v Stratford Village and Adriatic Land v Hippersley Point.

Register of contractual controls

The government is expected to proceed with a new public register of contractual controls under Part 11 of the Levelling Up and Regeneration Act 2023. Parties will need to disclose certain agreements that confer control over land, likely including options, pre‑emptions, promotion agreements and conditional contracts. While intended to support planning and development by increasing transparency, the disclosure of commercially sensitive information will be a concern for many developers and landowners, and uncertainty remains over the retrospectivity of these measures.

Construction

The government's decision on whether to reform or ban the use of cash retentions in the industry is expected in early 2026. A consultation on the proposals closed in October 2025. It contained two options for reform: an outright ban on the practice of withholding retentions (making retention clauses unlawful); or a requirement for retentions to be protected, either by allocating funds to designated bank accounts or requiring them to be covered by a guarantee. There has been a mixed industry response to the proposals, with no uniform consensus as to which approach should be adopted.

The appeal in Providence Building Services Ltd v Hexagon Housing Association Ltd was heard by the Supreme Court on 10 November 2025, and the judgment is expected in 2026. The case concerned whether, under an amended JCT Design and Building Contract (2016 edition) a contractor may immediately terminate for a repeated employer breach where the original breach had been remedied and no right to terminate had accrued. The interpretation of this issue is relevant across the JCT suite of contracts (and beyond) and could have significant consequences for employers and contractors.

The much-trialled introduction of a new construction products regime is expected to take shape in 2026, with the government confirming that a white paper on construction products reform would be published in spring 2026. From 8 January 2026, the Construction Products (Amendment) Regulations 2025 take effect, cementing the recognition of CE marking alongside UKCA for construction products used in the UK.

Planning

The government is sticking with its ambitious targets of significantly expanding clean energy generation, accelerating 150 decisions on major infrastructure projects and delivering 1.5 million new homes in England this Parliament.

The Planning and Infrastructure Act 2025 (PIA) received royal assent shortly before Christmas and will bring significant changes to the system. A flurry of supporting regulations and guidance will be published throughout 2026. Key measures include:

• reforms to the Nationally Significant Infrastructure Projects (NSIP) regime,
• reintroducing strategic planning across England,
• enabling Natural England to create environmental delivery plans (EDPs) to address the environmental impacts and allow developers to discharge certain environmental obligations by making a payment.

Planned changes to the National Planning Policy Framework (NPPF) are currently under consultation, and are likely to represent the most significant re-writing of planning policy since it was first published in 2012. Plan-making and decision-making policies are to be separated, with decision‑making moving to a more rules‑based approach. Proposals include the introduction of a so-called permanent presumption in favour of suitably located development, and a presumption in favour of granting permission for suitable development around existing rail stations, including within the Green Belt. Further changes would strengthen the policy around renewable and low-carbon energy and mandate that substantial weight is given to the benefits of commercial development which provides growth (including development supporting AI Growth Zones, logistics, and town centres).

A revised Environmental Improvement Plan was published in December 2025, which sets a five-year roadmap intending to improve England's natural environment. This includes the implementation of Biodiversity Net Gain requirements for NSIPs by May 2026, improving the implementation of BNG for minor, medium and brownfield sites, and introducing Environmental Outcome Reports, with timing to be confirmed. Elsewhere there are plans to relax some BNG requirements.

The government is also due to confirm whether it will implement its controversial proposals to pressure developers to speed up the rate at which residential development is built out.

Welsh planning law will be consolidated into a new Act and the first batch of applications will use the Infrastructure Wales Act consenting regime.

Tax

Following a relatively stable year in 2025 for corporate tax, 2026 will bring changes to the corporate tax landscape that businesses will need to navigate, some of which arise from the implementation of several key tax reforms.

Transfer pricing, permanent establishment and diverted profits 

Reform of the UK's international tax rules governing transfer pricing, permanent establishment and diverted profits, which will take effect (broadly) for accounting periods beginning on or after 1 January 2026, will affect UK businesses with international operations and non-UK businesses with UK-facing activity.

While many changes are welcome (including simplification of the transfer pricing rules in several areas and the exemption of domestic transactions between UK companies from transfer pricing requirements where there is no risk of tax loss) international businesses will need to familiarise themselves with the new framework.

Multinational businesses within the scope of UK transfer pricing rules will also need to prepare for the introduction of an International Controlled Transactions Schedule (ICTS). This annual filing requirement will capture specific factual information about relevant cross-border related party transactions in a standardised format. The ICTS is expected to take effect for accounting periods beginning on or after 1 January 2027, so businesses in scope should begin preparing during 2026 to capture the required information and establish appropriate processes and controls.

Carried interest

A revised regime for carried interest comes into effect from 6 April 2026, removing it from the capital gains tax regime and bringing it within the UK income tax framework. This represents a fundamental change to the taxation of carried interest, and the burden of complying with and monitoring compliance under the new regime will be significant across the fund management industry as it beds down in 2026.

HMRC is expected to publish guidance to accompany the new rules, which it is hoped will help businesses navigate the new rules.

Umbrella companies

New umbrella company tax legislation will come into effect from 6 April 2026, shifting responsibility for accounting for PAYE where a non-compliant umbrella company is used in a labour supply chain to engage workers. Parties in staffing supply chains will need to review how contingent workers are paid and by whom, identify which umbrella companies are used, and establish ongoing monitoring processes.

Stamp taxes

A new single tax on securities is planned to come into effect from 2027, which will replace the current stamp duty and SDRT regimes. More details of the new regime are expected during 2026, alongside the regulations that will enable the testing of the new digital service for the new tax.

Closing the tax gap

Following the large number of tax administration and compliance measures announced at the Autumn Budget, further detail is expected in 2026 on the new US-style reward scheme for whistleblowers of high-value fraud (which took effect from Budget day), alongside other measures to close the tax gap. These include a new "recklessness" criminal offence for direct taxes, reform of the publication of details of deliberate taxpayers, a fraud crackdown in the Construction Industry Scheme, and further investment in HMRC debt collection.

The government will also publish a consultation early in 2026 on proposals to enhance the current regime for uncertain tax treatments, following recent data suggesting a further decline in formal engagement with those rules by large businesses.

This Insight was written with the assistance of Michelle Tong and Tomisin Agbonifo, paralegals at Osborne Clarke.