Subscription rules from January 2027: what small businesses selling to consumers must do

If you sell anything on a repeat basis to consumers, from a monthly coffee box to a membership site, a maintenance plan or an app with a free trial, the rules on subscriptions are about to change. The government has confirmed that the new subscription contracts regime under the Digital Markets, Competition and Consumers Act 2024 will start in January 2027. It was previously expected in spring 2027, so the time to prepare is shorter than many owners assumed.

This guide explains what the rules cover, who is likely to be exempt, what the penalties are and what a small business can sensibly do before the end of the year. It is general information, not legal advice, and the detailed secondary legislation and guidance were still to be finalised at the time of writing.

What is changing, and when

The Department for Business and Trade published its response to the consultation on the new regime on GOV.UK. It confirms the main building blocks: clearer pre-contract information, reminders before renewals, cooling-off rights, and straightforward ways to cancel. Law firm commentary on the announcement says the January 2027 date does not add new substantive requirements. It simply shortens the preparation window.

Secondary legislation and statutory guidance still have to set out the practical detail, such as repayment timelines, contract exit terms and information notices. That means some specifics may still move, so keep an eye on official publications over the autumn.

The four things the rules focus on

• Information before sign up. Key terms must be given prominently and separately, not buried in the terms and conditions. That includes the recurring payment amount, how often it is charged, the minimum total payable and how to cancel. Customers must also give an express acknowledgement of the payment obligation at the final step of sign up.
• Reminder notices. Reminders must be sent before a free or discounted trial turns into a paid contract and before relevant renewals. Commentary on the consultation response says notices must go out at least once every six months for ongoing subscriptions, and must be sent on a durable medium. Email, SMS and WhatsApp are mentioned as acceptable, while an in-app notification on its own is not.
• Cooling-off periods. Customers get a 14 day cooling-off period at the start of most contracts. There is also a second 14 day period after certain renewals, and when a contract of 12 months or more begins, so the customer can cancel without penalty.
• Easy cancellation. Ending a contract must be straightforward, with no unnecessary hurdles. For subscriptions that are sold online, an online way to cancel must be available. If a customer can join in three clicks, they should not need a phone call and a form to leave.

Who is likely to be affected

The regime is aimed at consumer contracts, which means sales to individuals rather than to other businesses. Several law firm summaries list business to business sales as outside the scope, along with free subscriptions and sectors that are already tightly regulated, such as financial services, utilities and telecoms. Charitable memberships have a specific carve out too. The exact boundaries will depend on the final legislation, so do not assume you are exempt until you have checked the wording.

In practice, the rules are likely to catch a wide range of small businesses:

• Online shops with subscribe and save options or monthly boxes
• Gyms, studios and clubs that sell memberships to the public
• Software and app businesses with monthly or annual consumer plans
• Local services that sell recurring care or maintenance plans to households
• Anyone who offers a free trial that rolls into a paid plan

What happens if you get it wrong

The Competition and Markets Authority will be able to enforce the regime directly. Summaries of the legislation say it can impose penalties of up to 10% of worldwide annual turnover, with one law firm adding that the alternative figure is £300,000, whichever is greater. Beyond fines, there is the plain commercial risk of refunds: if a customer was not given the right notices or cancellation route, you may find yourself returning money you assumed was safely earned.

Promotions and gift subscriptions you run this autumn will renew or be cancelled once the rules apply, so design them with January in mind.

A practical checklist for this autumn

• List every recurring product you sell to consumers. Include trials, auto renewing annual plans and anything billed through a payment provider or app store.
• Walk through your own sign up as a customer. Are the price, frequency, minimum total and cancellation method clear before the pay button? Is there a clear final confirmation step?
• Try to cancel. Time how long it takes and count the steps. If cancelling requires an email, a phone call or a hunt through menus, fix it.
• Check your reminder emails. Can your system send a notice before a trial converts and before renewals, and can you prove it was sent? Make sure it uses email or text, not only an in-app message.
• Review your terms and refund process. Work out how you would calculate a fair refund, for example pro rata for digital services, when a customer uses a cooling-off period.
• Talk to your developer or platform provider early. Many billing platforms will add features for the new rules, but you should confirm what is included and what needs custom work.

Where the technology comes in

Much of this work is about systems, not paperwork. Reminder notices, clean cancellation flows and clear sign up screens all rely on how your website, app and billing tools are built. If your subscriptions run through a custom checkout or an ordering platform, it is worth scoping the changes now rather than in December. Our ecommerce team and process automation service can help with sign up journeys, automated renewal reminders and cancellation flows that are simple for customers and simple for you to manage.

The bottom line

For businesses that already treat customers fairly, the changes are mostly about making good practice visible, provable and easy to use. For those who rely on customers forgetting to cancel, the model will need rethinking. Either way, the date is January 2027, the regulator has real powers, and the sensible time to audit your subscription journeys is now. Watch GOV.UK for the final regulations and guidance, and update your plans as the detail lands.