Microsoft has announced significant pricing changes for Microsoft 365 and Office 365 commercial subscriptions, with the new pricing taking effect from 1st July 2026 for new and renewing customers globally. Existing customers will move to the updated pricing at their next renewal date after this point.
For many UK businesses, this will be the largest Microsoft 365 pricing adjustment in several years, with some licence increases ranging between 5% and 33% depending on the subscription type.
At Smart IT, we want to help our customers understand what’s changing, how it may affect their business, and what steps can be taken to reduce unnecessary costs.
What’s Changing in July 2026?
From 1st July 2026, Microsoft will introduce updated commercial pricing across many Microsoft 365 and Office 365 plans. Microsoft says the changes reflect the additional value now included within the platform, including:
- AI-powered productivity features
- Enhanced security and compliance tools
- Expanded Intune and device management capabilities
- Additional governance and identity protection features
Microsoft has confirmed that standalone Microsoft Teams and standalone Microsoft Copilot licences are not included in this pricing update.
Which Licences Are Increasing?
The price rises affect many commonly used business licences, including:
- Microsoft 365 Business Basic
- Microsoft 365 Business Standard
- Office 365 E3
- Microsoft 365 E3
- Microsoft 365 E5
- Frontline Worker licences (F1 / F3)
Some reports indicate that Microsoft 365 Business Premium may not receive the same suite price increase, making it an increasingly attractive option for SMEs when comparing value versus features.
Expected Price Changes
While UK pricing may vary slightly due to currency and regional adjustments, Microsoft partners are currently reporting estimated increases such as:
| Licence | Approximate Increase |
| Microsoft 365 Business Basic | ~16% |
| Microsoft 365 Business Standard | ~12% |
| Office 365 E3 | ~13% |
| Microsoft 365 E3 | ~8–11% |
| Microsoft 365 E5 | ~5% |
| Frontline licences (F1/F3) | Up to 25–43% |
Why Are Microsoft Increasing Prices?
Microsoft states that Microsoft 365 has evolved far beyond a traditional Office suite and now includes integrated:
- AI capabilities
- Endpoint management
- Advanced cybersecurity
- Identity protection
- Compliance and governance tools
Recent additions include expanded Copilot integration, enhanced Defender capabilities, and additional Intune functionality across several licence tiers.
What This Means for Your Business
If your organisation relies heavily on Microsoft 365, the impact could be noticeable, particularly for businesses with larger user counts or frontline worker licences.
However, the July 2026 changes also present an opportunity to review whether your current licensing setup is still the most cost-effective and suitable for your business.
Many organisations are currently:
- Paying for unused licences
- Using higher-tier licences unnecessarily
- Running third-party tools that duplicate Microsoft functionality
- Missing out on features already included within their subscriptions
Can You Avoid the Increase?
In some cases, businesses may be able to reduce the impact by:
- Renewing before July 2026 to lock in current pricing
- Reviewing unused or unnecessary licences
- Consolidating third-party security or management tools
- Switching to more suitable licence types
- Taking advantage of included Microsoft features instead of separate products
How Smart IT Can Help
Microsoft licensing can quickly become complicated, especially with ongoing changes to pricing, bundled features, AI tools, and security capabilities.
At Smart IT, we can help your business:
- Review your current Microsoft 365 licensing
- Identify cost-saving opportunities
- Remove unused or unnecessary licences
- Assess whether Business Premium or alternative licences offer better value
- Prepare for future Microsoft pricing and AI changes
- Ensure you are getting maximum value from your Microsoft investment
Final Thoughts
The Microsoft 365 price increases arriving in July 2026 will affect many UK businesses, but they also provide a good opportunity to review your existing setup and ensure your organisation is properly optimised.
With the right planning, many businesses can minimise the financial impact while also improving security, productivity, and overall value from Microsoft 365.
If you would like Smart IT to review your Microsoft licensing before your next renewal, get in touch with our team today.
