Microsoft 365 Prices Are Rising in July 2026: What UK Small Businesses Must Do Before 30 June

If you’ve been putting off a decision about Microsoft 365, you need to act fast. From 1 July 2026, Microsoft is raising prices across most of its business plans, and there’s a narrow window to lock in today’s rates. For UK small business owners already juggling tight budgets, this is exactly the kind of unexpected cost spike that keeps you up at night. The good news? You have options, and with a bit of planning before the end of June, you can soften the blow or even dodge it altogether.

This matters because Microsoft 365 isn’t just an email service anymore—it’s woven into how most small businesses work. If you’re using Teams for client calls, SharePoint for file sharing, or Excel for those crucial spreadsheets, a price rise ripples through your whole operation. Let’s walk through what’s changing, why it’s happening, and most importantly, what you should do right now.

What’s actually changing on 1 July 2026?

Microsoft has announced price increases across Business Basic, Business Standard, Business Premium, and Microsoft 365 Apps for business plans. The rises vary by plan and region, but most UK customers are looking at somewhere between 10% and 15% on their monthly or annual spend.

Business Basic is going up. Business Standard is going up. Even if you’re on a legacy plan, there’s a good chance you’ll feel this somewhere in your Microsoft ecosystem. The company’s reasoning is straightforward: they’re investing heavily in artificial intelligence features, cloud infrastructure, and security enhancements. Whether you’ll use those new features or not, that’s the cost you’re paying for.

If you’re on an annual plan that renews after 1 July, your renewal price will reflect the new rates. If you’re on a monthly plan, the increase happens on your next billing date after 1 July. There’s no grace period and no exceptions—unless you act before the deadline.

Who really needs to care about this?

Honestly? If you’re using any paid Microsoft 365 plan, this affects you. Even small teams add up. A five-person business on Business Standard could be looking at an extra £50 to £100 per month by the end of the year, depending on your specific plan and how the pricing lands in your region.

The impact is sharper if you’re already stretched on IT budgets. And let’s be real—most small businesses are. You might have only recently switched to cloud storage or Microsoft Teams because your IT support provider (or common sense) told you it was the sensible move. Now you’re being asked to pay more for the privilege.

That said, if you’re using a few free accounts and have no plans to scale, this might not be your immediate crisis. But if you’re running a proper business with shared files, collaboration tools, and company email, you need to pay attention.

Your three options before 30 June

You’re not completely trapped. Here’s what you can actually do:

• Commit to an annual plan and lock in current prices. This is the nuclear option, but it works. If you move to a yearly contract before 1 July, you’ll pay today’s rates for the next 12 months, then face the increase when you renew in 2027. It’s not perfect, but you’ve bought yourself a year of predictable costs. Just make sure you’re comfortable committing for that long first.
• Move to a cheaper plan that still does what you need. Not every business needs Business Premium. Some might be fine stepping down to Business Basic, losing a few features in exchange for lower costs. Others might benefit from Microsoft 365 Apps for business if they only really need Office software and email. Sit down and honestly assess whether you’re paying for features you don’t use.
• Do nothing and accept the increase. Sometimes the friction of switching isn’t worth the saving, and that’s fine. Just budget for it now so it doesn’t surprise you in July.

The case for locking in an annual plan right now

If you’ve got 30 June in your calendar, seriously consider switching to annual billing before that date arrives. You’ll pay more upfront, but you’ll know exactly what you’re spending for the next year. For a business with tight cash flow, that predictability is often worth more than the slight discount you’d get anyway.

The maths is simple. If Business Standard is rising from roughly £14 per user per month to around £16 or £17, that’s an extra £24 to £36 per user per year. Multiply that across your team, and for a 10-person business, you’re talking about £240 to £360. An annual commitment locks you out of that.

One note of caution: make sure your contract actually allows you to switch to annual billing without penalty or additional cost. Check with your account or reseller first—it should be straightforward, but it’s worth confirming.

What if you’re serious about switching to Google Workspace?

This isn’t a quick decision, so you need to start thinking about it now if you’re considering it. Google Workspace has different pricing (usually around £6 to £14 per user per month depending on your plan), and it covers email, calendar, Drive storage, Docs, Sheets, and Slides.

The real cost isn’t the software, though. It’s the migration. You’ll need to move your email history, retrain staff on how Google Docs works differently from Word, reconfigure any integrations or workflows you’ve built around Microsoft 365, and handle the transition without losing productivity. Some businesses do this seamlessly. Others find it painful.

If you’re already working with an IT support provider, now is the time to ask them whether a switch makes sense for your business. They can give you an honest answer based on what you’re actually doing with Microsoft 365 today.

What about cybersecurity small business UK considerations?

Here’s something worth mentioning: Microsoft 365’s price rise partly reflects their investment in security features. Defender integration, advanced threat protection, and data loss prevention tools are baked into the higher plans. If you’re relying on Microsoft 365 for security (and frankly, many small businesses do), switching to a cheaper alternative means you might lose some of that protection.

Google Workspace has security features, but they’re not quite as mature or integrated. If you’re storing sensitive client data, handling payment information, or managing compliance obligations, don’t let price alone drive your decision. The cost of a breach or data loss would dwarf any saving you’d make.

This is where good managed IT services Midlands providers earn their keep. They can audit your setup, tell you whether you’re getting the protection you need, and guide you through any migration safely if that’s the right call.

Combining Microsoft 365 changes with your broader IT strategy

Don’t make this decision in isolation. Your Microsoft 365 costs are part of a bigger picture that includes your VoIP system, your accounting software, your CRM, and everything else you run your business on.

If you’re already spending on Sage 50 for accounting and Act! for customer relationship management, shifting Microsoft 365 costs around might be less impactful than optimising how those tools work together. Sometimes the real saving comes from streamlining your whole software stack, not just tweaking individual subscriptions.

Again, this is where a conversation with your IT support provider makes sense. They’ll see your whole setup and spot opportunities you might miss.

What to do this week

You’ve got less than two months. Here’s a practical to-do list:

• Pull your current Microsoft 365 billing statement and note what you’re paying and when your renewals are due.
• List the features you actually use across your team. Don’t just assume you need every feature.
• If you’re on a monthly plan set to renew after 1 July, contact your reseller or Microsoft directly and ask about switching to annual billing before 30 June.
• If you’re curious about alternatives, get quotes from Google Workspace providers and ask for a migration estimate and timeline.
• Talk to your IT support provider about the options and what makes sense for your business.
• Make a decision and action it before 30 June. Don’t leave it to the last week.

The reality check

Microsoft isn’t being unreasonable here. They’ve given months of notice, and they’re investing in real improvements to their service. The frustration is fair, though—you didn’t budget for this, and hitting small businesses with subscription hikes is never fun.

The honest truth is that for most UK small businesses, the increase will sting a bit but won’t be catastrophic. If you’re on a tight margin, even a couple of hundred pounds matters. But it’s not usually the sort of cost that forces a business decision alone.

Where it does matter is if this is the nudge that gets you thinking about whether your software spend is actually aligned with your business needs. Sometimes it is. Sometimes it isn’t. That’s a conversation worth having regardless.

Making your final call

You’ve got options, and that’s the main thing to remember. You’re not locked into accepting the July price rise as-is. Whether you lock in an annual plan, downgrade to a cheaper tier, explore Google Workspace, or simply accept the increase and move on, that’s your call to make.

Just make it before the end of June. Decisions made in July will be decisions made on Microsoft’s terms, not yours.

If you’d like to talk through what makes sense for your business setup, we’re happy to help. Here at Softext in Tamworth, we support small businesses across the Midlands with their whole IT picture—Microsoft 365, Sage 50, Act!, phone systems, security, the lot. We’ve helped plenty of businesses navigate software cost changes like this one, and we can do the same for you. Get in touch if you’d like to discuss your options before the deadline.