A new year heralds fresh opportunities, but it also brings fresh challenges for businesses across the UK and EU. From financial compliance deadlines to navigating post-Brexit trade complexities, and addressing the ever-evolving landscape of cybersecurity and ESG (Environmental, Social, and Governance) reporting, there is much to consider. Here are the top risks businesses must prioritise as we move into 2025.
1. Early-Year Deadlines: VAT and Data Protection Filings
January and February are critical months for businesses, as they face key filing deadlines for VAT (Value-Added Tax) and data protection compliance. The UK’s Making Tax Digital (MTD) initiative, which mandates digital record-keeping and submissions for VAT, requires businesses to ensure their systems are up to date. Non-compliance could lead to fines and disrupted operations.
Similarly, data protection authorities in both the UK and EU are tightening oversight. Companies must submit their annual data protection impact assessments (DPIAs) and ensure compliance with the General Data Protection Regulation (GDPR). Recent trends indicate increasing fines for breaches, so prioritising data security and transparency is non-negotiable.
2. Post-Brexit Trade: Navigating New Rules
Post-Brexit trade continues to challenge businesses, particularly those involved in cross-border transactions. Changes to rules of origin requirements, customs declarations, and VAT on imports and exports mean companies must be diligent.
For example, goods exported from the UK to the EU now face stricter documentation and inspection protocols. Businesses must understand how these changes impact their supply chains and update their trading systems accordingly. Many firms are still adapting to the new Import One Stop Shop (IOSS) for handling VAT on EU e-commerce sales.
Moreover, businesses trading with Northern Ireland must remain mindful of the Windsor Framework. While designed to simplify trade between Great Britain and Northern Ireland, it introduces unique complexities, especially for agricultural and food products.
3. Cybersecurity: A Growing Threat
As businesses increasingly digitise operations, the risk of cyberattacks grows exponentially. In 2024 alone, cyber incidents accounted for significant financial losses across multiple industries. Ransomware attacks, phishing schemes, and data breaches are becoming more sophisticated, often targeting SMEs that lack robust defences.
In 2025, new cybersecurity regulations under the EU’s NIS2 Directive come into force. These rules impose stricter requirements on businesses providing essential services, including IT, energy, and healthcare. UK businesses with operations in the EU must comply, even as the UK enforces its own cybersecurity framework.
To mitigate risks, companies must invest in advanced threat detection, employee training, and regular security audits. Collaborating with managed security service providers (MSSPs) can also offer scalable and cost-effective protection.
4. ESG Reporting: The New Business Imperative
Environmental, Social, and Governance (ESG) criteria are no longer just buzzwords—they are now a key component of business strategy and compliance. From 2025, the Corporate Sustainability Reporting Directive (CSRD) will apply to a broader range of companies within the EU, including many UK firms with EU operations.
This directive requires detailed disclosures on how businesses are managing environmental impacts, human rights, and governance practices. Non-compliance not only risks penalties but also damages a company’s reputation among investors and consumers who increasingly prioritise sustainability.
UK businesses must prepare for similar requirements, as the government aligns its climate reporting rules with international standards. Comprehensive ESG strategies, supported by accurate data collection and transparent reporting, will be essential for maintaining competitive advantage.
Practical Steps to Tackle 2025 Risks
To navigate these challenges effectively, businesses should take the following steps:
Review and Update Compliance Systems: Ensure all VAT and data protection systems are up to date. Invest in reliable software to streamline reporting processes.
Enhance Trade Readiness: Conduct a thorough review of supply chains and trading processes. Seek professional advice on customs and VAT rules to avoid costly errors.
Strengthen Cyber Defences: Regularly update cybersecurity measures, including firewalls, antivirus software, and employee training. Conduct penetration tests and develop an incident response plan.
Build a Robust ESG Framework: Appoint an ESG officer or team to oversee compliance. Establish clear metrics for tracking environmental and social impact, and integrate these into your annual reporting.
The start of a new year is an ideal time to evaluate risks and implement strategies for resilience. By addressing these challenges proactively, UK and EU businesses can not only safeguard their operations but also position themselves for growth in an increasingly complex regulatory and market environment. The key is to stay informed, plan ahead, and adapt swiftly to emerging changes.
Published: 17/01/2025
