Microsoft 365 Review UK Small Business 2026: Is It Still Worth the Price?

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Introduction

If you run a small business in the UK, chances are someone has already told you to “just get Microsoft 365.” And honestly, for many businesses, it’s solid advice. But with price increases of between 12% and 17% landing in July 2026, it’s fair to ask whether Microsoft 365 still represents good value — or whether you’re paying premium prices for tools you’ll barely use.

In this review, we’ll cut through the marketing fluff and give you a clear-eyed look at what Microsoft 365 actually offers UK small business owners and sole traders in 2026. We’ll cover the plans worth considering, what you get for your money, where it falls short, and who it’s genuinely the right fit for. By the end, you’ll know exactly whether to sign up, upgrade, or look elsewhere.

What Is Microsoft 365 for Business?

Microsoft 365 (formerly Office 365) is a subscription-based suite of productivity tools. For small businesses, that means familiar applications like Word, Excel, PowerPoint, and Outlook, bundled together with cloud storage (OneDrive), video conferencing (Teams), and a growing set of AI-powered features under the Copilot brand.

Microsoft sells several tiers aimed at businesses. For small UK businesses and sole traders, the two most relevant are Business Basic and Business Standard.

Microsoft 365 UK Pricing in 2026

Microsoft raised prices on most business plans from 1 July 2026 (Business Premium was left unchanged). As things stand, Microsoft 365 Business Basic is £5.40/user/month and plain Business Standard is around £11.50/user/month, both on an annual plan (paid yearly, excluding VAT).

Two wrinkles make the pricing more confusing than it used to be. First, Microsoft now sells most plans in two flavours — with Teams and without Teams (the Teams-free versions are a little cheaper; Business Basic without Teams is £4.20). Second, Microsoft heavily promotes “with Copilot” versions of Standard and Premium that bundle in its full AI at a premium (covered below). So always check exactly which version you’re selecting on Microsoft’s pricing page.

Business Basic — £5.40/user/month (with Teams)

This is the entry-level plan and it’s web and mobile only — meaning you won’t get the full desktop versions of Word, Excel, or PowerPoint installed on your computer. It’s £5.40/user/month with Teams included, or £4.20 without Teams. What you do get includes:

• Web-based versions of all core Office apps
• Microsoft Teams (chat, video calls, meetings) — though Teams is now sold separately on some newer plans (see below)
• Exchange email with a custom domain (100 GB mailbox, raised from 50 GB in the July 2026 update)
• 1 TB OneDrive cloud storage per user
• SharePoint for team file sharing

For sole traders who primarily work in a browser and don’t need locally installed apps, this can be a cost-effective entry point. But if you do any serious work in Excel or Word — complex spreadsheets, formatting-heavy documents — the web versions have real limitations compared to the desktop software.

Business Standard — around £11.50/user/month (or £18.10 with Copilot built in)

This is the plan most small businesses actually need, because it adds the fully installed desktop Office apps. There are now two versions worth knowing about:

• Plain Business Standard (around £11.50/user/month) — the desktop apps plus the free, limited Copilot Chat.
• Business Standard with Copilot (£18.10/user/month with Teams, or £15.60 without) — the same apps with the full Microsoft 365 Copilot AI built into Word, Excel, PowerPoint and Outlook.

Either way, on top of Basic you get:

• Fully installed desktop versions of Word, Excel, PowerPoint, Outlook and OneNote (plus Teams, subject to the note below)
• Apps can be installed on up to five devices per user
• Microsoft Bookings (online appointment scheduling)
• Webinar hosting with registration pages

Microsoft’s pricing page now leads with the “with Copilot” version, so double-check which one you’re actually buying. For most small businesses doing everyday Office work, plain Business Standard at around £11.50 is the sensible choice — add Copilot only if you’ll genuinely use it.

What’s Good About Microsoft 365 for Small Businesses

Familiarity and Compatibility

There’s no getting around it — Word, Excel, and Outlook are the default standard across UK business. If you’re sending documents to clients, working with accountants, or receiving files from suppliers, .docx and .xlsx formats just work. You’ll never hit a compatibility wall.

For businesses working with larger corporate clients or public sector organisations in particular, this is genuinely important. Google Docs compatibility has improved, but it still occasionally mangles formatting on complex Word documents.

Teams Is Genuinely Useful

Microsoft Teams has matured considerably. For small teams, it combines chat, video calls, file sharing, and task management in one place. If you’re currently paying separately for Zoom and Slack, consolidating onto Teams could actually save you money.

Teams calls are reliable, the screen sharing works well, and the mobile apps are solid. It’s not the slickest tool on the market, but it does the job. One wrinkle worth knowing: following a 2024 competition ruling, Microsoft now sells Teams separately from Microsoft 365 in the UK and EU, so newer subscriptions may list it as a separate line rather than bundled in — check whether your chosen plan includes it.

OneDrive and SharePoint for File Management

Each user gets 1 TB of OneDrive storage, which is generous. Files sync reliably across devices and the SharePoint integration means small teams can share and collaborate on documents without emailing files back and forth. Version history is included, which is a lifesaver when a colleague overwrites something important.

Copilot AI: What’s Included and What Costs Extra

Microsoft has been baking AI into 365 through its Copilot features — but it’s important to be clear about what you actually get for your subscription. Every business plan now includes the free, limited Copilot Chat (recently renamed Copilot Basic): a secure AI chat assistant that can draft content, summarise information, answer questions, and work with your inbox and calendar. It’s genuinely handy for routine tasks.

What the base plans do not include is the full Microsoft 365 Copilot — the AI that works directly inside Word, Excel, PowerPoint and Outlook, grounded in your own documents and data. That costs extra, in one of two ways: the Copilot Business add-on at £13.80/user/month (paid yearly) on top of your base plan, or a bundled “Business Standard with Copilot” plan at £18.10/user/month. So if you’re weighing Microsoft up against Google Workspace — which now includes its Gemini AI in the plan price from Business Standard upward — bear in mind that Microsoft charges extra for the equivalent in-app AI.

Where Microsoft 365 Falls Short

It’s Not Cheap for Sole Traders

If you’re a sole trader and you just need email, word processing, and maybe spreadsheets, Microsoft 365 Business can feel expensive. At around £11.50 per month for Business Standard (after the July 2026 rise), that’s roughly £138 per year.

Worth knowing: Microsoft’s consumer plan, Microsoft 365 Personal (£8.49/month), includes the full desktop apps, 1 TB of storage, and Copilot for personal use — and it’s actually cheaper than Business Standard. The catch is that it’s a personal subscription: no custom-domain business email (yourname@yourbusiness.co.uk), no admin controls, and no SharePoint. If you can live with a personal-style email address, it can be a smart, cheaper choice for a solo operator. Beyond that, free or cheaper alternatives like LibreOffice (for desktop apps), a free personal Google account (Gmail plus Docs and Sheets), or Google Workspace’s entry plan might be worth considering if your budget is tight.

The Web Apps Are Noticeably Limited

If you go for Business Basic to save money, be prepared for frustration if you do anything beyond basic document work. The web versions of Excel in particular lack some functions that power users rely on. Macros, for instance, aren’t supported in the browser version. If you’re automating anything in Excel, you need the desktop app.

Complexity for Simple Needs

Microsoft 365 is a large, sprawling platform. For a sole trader who just wants email and a word processor, the admin portal can feel overwhelming. There’s a learning curve to setting things up properly — creating user accounts, managing licences, configuring email. It’s not insurmountable, but it’s not plug-and-play either.

No Built-in Accounting

This is worth stating clearly for UK small business owners. Microsoft 365 does not include any accounting software. You’ll still need something separate — FreeAgent, QuickBooks, Xero, or Sage — for invoicing, VAT returns, and Making Tax Digital (MTD) compliance with HMRC. Microsoft 365 is a productivity and communication suite, not a business management platform.

Microsoft 365 vs Google Workspace for UK Small Businesses

The most common comparison is with Google Workspace, which starts at around £5.90/user/month for its Business Starter plan (correct at time of writing).

Feature	Microsoft 365 Business Standard	Google Workspace Business Starter
Price (approx.)	~£11.50/user/month	£5.90/user/month
Desktop apps	Yes	No (web only)
Email	Outlook / Exchange	Gmail
Cloud storage	1 TB OneDrive	30 GB pooled
Video calling	Teams	Google Meet
AI included in the price	Limited Copilot Chat only (full Copilot is a paid add-on)	Full Gemini

Google Workspace is cheaper, includes its Gemini AI in the plan price, and if your team is already comfortable in Google Docs and Sheets, it’s a credible option. But if you regularly work with clients or partners who use Office formats — and in the UK, most businesses do — Microsoft 365’s native compatibility is a genuine advantage.

Is Microsoft 365 Right for Your Business?

You’ll probably love it if:

• You work in Office file formats regularly and need full desktop apps
• You have a small team that needs shared email, file storage, and video calls in one place
• Your clients or supply chain are corporate or public sector — where Office is the standard
• You want reliability and don’t mind paying a premium for it

You might want to look elsewhere if:

• You’re a sole trader with very simple needs and a tight budget
• You’re already embedded in Google’s ecosystem and your clients are flexible on formats
• You only need email hosting (in which case a basic email service from your hosting provider may suffice)
• You need accounting features — Microsoft 365 won’t cover that

FAQ

Is Microsoft 365 worth it for a one-person business in the UK?

It depends what you do. If you’re producing professional documents, sending proposals, or managing spreadsheets that need Excel’s full feature set, then yes — Business Standard at around £11.50/month is justifiable. If you just need email and occasional word processing, you might find cheaper or even free alternatives adequate. Google Workspace’s Business Starter plan, or a free personal Google account with LibreOffice installed locally, could cover your needs for less.

Does Microsoft 365 help with Making Tax Digital (MTD) compliance?

Not directly. Microsoft 365 doesn’t include accounting or bookkeeping software, so it won’t submit VAT returns or link to HMRC on your behalf. For MTD compliance, you’ll need dedicated accounting software like Xero, QuickBooks, FreeAgent, or Sage. Microsoft 365 can complement that software — you might track expenses in Excel, for example — but it’s not a replacement.

Can I use Microsoft 365 on multiple devices?

Yes. With Business Standard, each user licence allows installation on up to five PCs or Macs, five tablets, and five smartphones. So if you work across a laptop, desktop, and phone, one licence covers all of them. Business Basic doesn’t include desktop installs, but you can access the web apps on any device.

What happened to Microsoft 365 prices in the UK in 2026?

Microsoft raised prices on most UK Microsoft 365 business plans on 1 July 2026, while leaving Business Premium unchanged. As of now, Business Basic is £5.40/user/month (with Teams) and plain Business Standard is around £11.50/user/month, both on annual plans excluding VAT. If you’re on an annual subscription, your renewal price will reflect the new rates when your plan next renews. It’s also worth checking whether you’re looking at a “with Teams” or “without Teams” plan, and a plain or “with Copilot” version, as both affect the price.

Conclusion: Our Verdict

Microsoft 365 remains the productivity suite to beat for UK small businesses in 2026 — but it’s no longer the automatic no-brainer it once was. The July 2026 price increases have made it noticeably more expensive, and if you’re a sole trader with modest needs, the value equation is tighter than it used to be.

That said, for most small businesses — especially those working with desktop Office apps, managing a team, or dealing with clients who expect Word and Excel files — Business Standard at around £11.50/user/month is still the right choice. You get reliable, professional-grade tools, generous cloud storage, Teams for communication, and a free tier of Copilot AI (with the full version available if you want to pay for it).

It’s not perfect — storage on the cheaper plan is modest, offline working is fine but not its strongest suit, the full Copilot AI costs extra, and you’ll need separate accounting software regardless. But as an everyday business productivity tool, it does what it promises without unnecessary complexity.

If you already live in Microsoft’s ecosystem, it’s a very natural step. If you’re a heavy Google Docs user or your clients are flexible on file formats, it’s worth weighing up Google Workspace — which undercuts Microsoft on price and bundles its AI in — before committing.

Pricing and features correct at time of writing. Plans and capabilities are subject to change — always confirm current details on the provider’s website before purchasing.