Microsoft 365 Copilot for a small business: UK cost, the plan you need first, what it can see and what happens to your data

Microsoft 365 Copilot Business costs £13.80 a user a month in the first year and £16.10 after that, paid yearly and before VAT, and it only works on top of a Microsoft 365 business plan you pay for separately. On 1 October 2026 the cheaper route for most small firms was the bundle: Microsoft 365 Business Standard with Copilot at £18.10 a user a month, which is £1,086 a year for five people before VAT.

Every figure below is from Microsoft's own UK pages, read in a browser on 1 October 2026. Each price on those pages carries the line "Price does not include VAT". We did not buy or test anything.

The plan you need first

Copilot is not sold on its own. Microsoft's licensing page, updated on 25 September 2026, lists the plans the Copilot Business add-on can sit on: Microsoft 365 Business Basic, Business Standard, Business Premium, Apps for Business and Teams Essentials. It is for firms of up to 300 users.

The base plans, a user a month paid yearly:

• Business Basic, £5.40. Web and mobile versions of the Office apps, with business email and Teams.
• Business Standard, £10.80. The desktop apps as well.
• Business Premium, £16.90. Business Standard plus device management and extra security.

What five people pay in a year

All rows are paid yearly, before VAT: the monthly price times five people times 12 months. Paying monthly costs more (the add-on is £19.32).

The £13.80 add-on price is an offer. Microsoft's footnote says it runs from 1 July 2026 to 31 December 2026, needs an annual commitment, and that the lower price applies to the first year only. Budget for £16.10 from year two.

The bundle is cheaper than its parts. Business Standard with Copilot at £18.10 is £6.50 a user a month less than Business Standard plus the add-on at the offer price, a difference of £390 a year for five people. The page did not mark £18.10 as an offer. Microsoft's own answer on how to buy says new customers can choose a plan with Copilot and existing customers can add Copilot as an add-on, yet the Business Standard page also showed a "Switch for £18.10" button. We did not test whether an existing customer gets that price, so ask before your renewal date.

VAT comes on top. At 20%, £1,086 becomes £1,303.20. A VAT-registered firm reclaims it; our guide to claiming an AI subscription as a business expense covers the tax side.

What you get without paying for Copilot

Eligible Microsoft 365 plans already include Copilot Chat at no additional cost. Microsoft's overview, updated on 10 September 2026, says Copilot Chat answers from the web and from files you upload, and rates its reasoning across the firm's own data as limited. The paid licence adds reasoning across the firm's emails, meetings, calendars, chats, documents, sites and files, plus Copilot inside Word, Excel, PowerPoint, Outlook and Teams.

If staff only need a chat window, the plan the firm has may already cover it.

What Copilot can see

Microsoft's privacy page, updated on 18 August 2026, says Copilot draws on the emails, chats and documents a user already has permission to open, and that it only surfaces data to which that user has at least view permission.

Copilot does not get around permissions, but it makes every existing permission easy to use. If a payroll spreadsheet or a folder of client files was shared years ago with everyone in the firm, Copilot can surface it to any licensed user who asks. Microsoft's page tells customers to use the permission controls in SharePoint and its other services for this reason.

Before you assign a licence:

1. List the SharePoint sites, Teams and shared OneDrive folders the firm has.
2. Open the sharing settings on each and remove "everyone" and whole-firm groups from anything about pay, staff, health or a named client.
3. Check who can open each shared mailbox, because email is among the content Copilot draws on.
4. Start with two or three licences and ask those users to search for something they should not be able to see.

What Microsoft's terms say about your data

• Training. Microsoft says prompts, responses and the data Copilot reaches in your files and email are not used to train its foundation models.
• Contract. Microsoft says use of Copilot by organisations is covered by its Data Protection Addendum and Product Terms, with Microsoft acting as a data processor. The Data Protection Addendum is Microsoft's data processing agreement.
• What is kept. Prompts and responses are stored as each user's Copilot activity history. An administrator can search that history and set how long it is kept.
• Where it is processed. For users in the European Union, Microsoft keeps processing inside its EU Data Boundary. The same page says customers outside the EU "may have their queries processed in the US, EU, or other regions". A UK firm is outside the EU. Microsoft sells an Advanced Data Residency add-on with further commitments, which we did not price.
• Web searches. When Copilot searches the web it sends a short query to Bing with the user and tenant identifiers removed, and Microsoft says those queries are not used for training.
• Other companies' models. Microsoft offers models from OpenAI and Anthropic inside Copilot. Its page on the Anthropic models says they are excluded from the EU Data Boundary and are switched off by default for UK customers. An administrator can turn them on. A further group, which Microsoft calls Anthropic models with Data Retention, stores prompts with Anthropic for up to 30 days outside Microsoft's own terms and is off by default everywhere.

Our guides for accountants using Copilot with client data, for solicitors writing an AI policy and for dental practices handling patient data cover the professional rules that sit on top.

Names and limits

Microsoft's documentation now says Microsoft 365 Copilot has been renamed Microsoft Copilot. The UK pricing page still sold it as Microsoft 365 Copilot Business on 1 October 2026, so both names are in use.

Microsoft publishes no figure for how many prompts a licensed user can send; see our guide to usage limits on paid AI plans.

Overlyft is an AI agency that sets up AI office assistants for ten trades: they are set up in the firm's own office for a fixed price agreed after an audit, the firm pays Anthropic directly for its own Claude plan, and a person approves anything that goes to a customer.

This is general information, not legal advice. Prices and terms change, so check Microsoft's pages on the day you buy.