
As Microsoft pushes Copilot deeper into Microsoft 365, owners and managers of small and medium-sized businesses face a confusing licensing landscape, shifting product names and price rises taking effect on 1 July 2026. Here is what has changed, what is on offer now, and the controls every administrator should understand.
For most UK small and medium-sized businesses, Microsoft 365 has quietly become the backbone of daily operations: email in Outlook, files in SharePoint and OneDrive, meetings in Teams, and documents in Word, Excel and PowerPoint. Over the past three years, Microsoft has been layering an artificial intelligence assistant — Copilot — on top of that stack. What started as a single premium add-on has fragmented into a confusing patchwork of free tiers, paid tiers, bundles and admin controls. And the rules keep changing.
With significant pricing changes due on 1 July 2026, a new SME-friendly licence already on the shelves, and free Copilot features being pulled from Office apps for unlicensed users at larger firms, now is the moment for business owners to take stock.
A short history of moving goalposts
Microsoft 365 Copilot was first unveiled in March 2023 as a glimpse of “AI for work”. When it became generally available on 1 November 2023, the terms were eye-watering for smaller firms: a substantial per-user add-on on top of an existing Microsoft 365 Enterprise licence, with a minimum commitment of 300 seats. The Register reported at the time that small businesses “need not apply”.
That barrier did not last long. In January 2024, Microsoft removed the 300-seat minimum and extended eligibility to Office 365 E3 and E5 customers. At the same time, the company launched Copilot Pro for individuals and began folding its various AI products — including the old Bing Chat and Bing Chat Enterprise — under the single “Copilot” brand.
A further rebrand arrived in January 2025: the work-account version of Microsoft Copilot, previously known as Bing Chat Enterprise, was renamed Microsoft 365 Copilot Chat and positioned as a free “freemium” entry point for any user signed in with an Entra ID. The branding distinction was, and remains, easy to miss — the free product (Microsoft 365 Copilot Chat) is not the same as the paid product (Microsoft 365 Copilot), and neither is the same as the consumer Copilot Pro or the older “Microsoft 365 Chat” feature.
Through 2025, Microsoft kept tinkering. Role-based products such as Copilot for Sales, Service and Finance were retired and folded into the main Microsoft 365 Copilot licence at no extra cost. The “messages” consumption unit for autonomous agents was rebranded as “credits”. The Microsoft 365 desktop app itself was renamed to the “Microsoft 365 Copilot app”, regardless of whether the user actually had a Copilot licence.
The most significant shift for SMEs came on 1 December 2025 with the launch of Microsoft 365 Copilot Business, a new SKU aimed squarely at companies with fewer than 300 users.
Where things stand in 2026
There are four Copilot options UK SMEs are likely to encounter: Continue reading →