8 Policies That Will Affect Your Business Before the End of the Year

The end of the year is intense for small businesses. But balancing the Budget and a new wave of employment and reporting rules will make it much harder.

As these policy shifts edge closer – with some already live and several sitting in that uncomfortable “waiting for Royal Assent” space – it’s important for businesses to keep up.

Simon Obee, Head of HR Advisory at Employment Hero stresses the importance of bracing for change. 

“With so many changes on the way, it’s important that business leaders prepare early and don’t get caught out. Many of the new provisions will involve financial penalties for getting things wrong, as well as the reputational damage that goes with it. 

“The good news is that there is plenty of help out there for businesses, and a decent amount of time to prepare for most of the changes.”

While you don’t have to be a policy junkie to do so, you do need to know what’s coming to avoid being caught out once changes hit payroll, contracts or staff expectations. Here’s what SMEs should be vigilant of now:

1. Predictable hours and notice periods are on the way

The Employment Rights Bill is moving and while debate continues in the Lords, one thing is clear: the days of last-minute rota changes without explanation are likely to soon be over.

While The British Chambers of Commerce and many other business leaders share concerns that the rules must work in real life, not just on paper, it is important for SMEs to prepare themselves for the new normal.

Why this matters:
If your business is reliant on sudden shift changes or calling people in when it gets busy, you’ll need a better system to justify those moves. That means clearer rotas, fair warning and a paper trail. Hospitality and retail will feel this most, but any workplace with variable hours will be affected.

Practical move:
Start treating rotas as commitments, not suggestions. Publish schedules earlier, track changes and explain them clearly.

2. Day-one rights are changing probation

Under the same Bill, day-one rights are strengthening with the right to claim unfair dismissal likely to become available from the first day of an employee’s employment. That means new hires will have new rights to challenge a termination of their employment. Even during probation, employers will need to show clarity, structure and fairness.

Practical move:
Use a simple plan that sets clear expectations, check in regularly, and keep notes whenever you do. If employers do that consistently, they’ll already be ahead of much of the market.

3. November Budget could hit payroll fast

The Autumn Budget landed on 26 November. Even modest NIC or threshold tweaks can bite in January – and being caught out this year could have ripple effects for months to come. Just look at last year’s Autumn Statement.

Why this matters: If payroll settings aren’t updated, precious time in January could be wasted on corrections, rather than getting ahead. 

Practical move: Book in time to update your software and run a test as soon as you’re clear on how any new Budget announcements could impact your business. Employment Hero’s payroll software could be a helpful place to start.

4. Statutory Sick Pay reform could raise your absence costs

The Government is reviewing who qualifies for sick pay and how quickly they get it. Changes are expected to come into force in April 2026:

For SMEs already absorbing rising wage and compliance costs, if more people become eligible for sick pay or receive it sooner, wage bills may increase. Keeping an eye on Government announcements matters, because if financial support is offered to help cover these costs, businesses will want to apply early.

Why this matters:
If eligibility widens or waiting days shorten, your business will shoulder the cost first. In small teams, one absence can be enough to derail a week of work. Better absence tracking now can help to avoid disputes later.

Practical move:
– Consider what it means for your business if more people qualify for SSP
– Test for average absences rising slightly this winter
– Make sure everyone knows how to report sickness and who to tell.

5. Statutory Sick Pay reform could raise your absence costs

The Data Use and Access Act became law in June 2025 and enforcement phases are rolling forward:

Why this matters:
Whenever privacy rules sharpen, employee data requests spike. If your HR files live in inboxes and desktops, you will not want to gather them under time pressure.

Practical move:
Employment Hero’s software can provide assistance with centralising documents, checking contracts and transferring tools where necessary. 

6. Companies House identity checks start this month

Identity verification for directors and people with significant control starts on 18 November 2025, with a transition period for existing entities:

Why this matters:
If leaders are not verified, filings will stall. This is not the kind of admin you want to juggle alongside year end, payroll, Budget and holiday season.

Practical move:
Verify directors now and store proof. Add this check to founder onboarding if your business is scaling.

7. Late payment reforms could finally shift power toward SMEs

The Government’s consultation on late payment reform closed in October. Proposals include mandatory shorter payment terms and penalties for persistent offenders:

Why this matters:
If you work with big customers on 60 or 90-day terms, the law may soon be on your side. But expect procurement processes to tighten and checks to increase.

Practical move:
Map your slowest payers and start tightening credit control now. If reform lands, you will be ready to claim your ground.

8. Making Tax Digital is getting very real

From April 2026, sole traders and landlords with income over £20,000 enter quarterly digital reporting. Lower thresholds follow and lower thresholds will follow in later phases:

Why this matters:
A huge number of small business owners are also landlords or sole traders. Quarterly reporting means new habits and fewer excuses. If your records are still in spreadsheets and shoeboxes, start preparing now.

Practical move:
Choose compliant software early and set quarterly reminders so you are not learning under duress in April.