Subscription contracts: what businesses need to know about the new UK cancel culture

On 10 August, as part of a roll out of 'everyday fixes' to help people with the cost of living, the Prime Minister announced that new rules targeting so-called 'subscription traps' will come into force in January 2027, rather than spring 2027 as previously anticipated.

Although the announcement changes the implementation timing, it does not appear to alter the core requirements set out in the Digital Markets, Competition and Consumers Act 2024 ('DMCCA') and the Government Response to its consultation published in April. However, consumer-facing businesses - particularly those operating subscription-based models for services, goods or digital content - should be preparing now.

The new regime introduces a more structured and prescriptive framework for consumer subscription contracts, with a clear objective: greater transparency at sign-up, fewer surprises during the contract, and easier exit rights for consumers.

What counts as a subscription contract?

The new regime applies where a consumer signs up to a contract that:

• provides ongoing or recurring supplies (e.g. services, such as spa or gym memberships, goods, such as recipe boxes or digital content, such as streaming subscriptions);
• involves automatic payments; and
• allows the consumer to cancel the arrangement.

It also captures common 'freemium' or discounted trial models where consumers are automatically enrolled into a paid subscription unless they remember to cancel before the trial ends.

Some sectors are excluded from the new regime, including utilities, insurance and financial services and certain charitable memberships, such as museum or gallery memberships linked to charitable purposes – although requirements to provide cooling-off periods under existing consumer regulations remain unaffected.

What are the key changes?

1. Clearer information upfront

A key theme of the DMCCA is transparency at the point of sign-up.

Before a consumer enters into a subscription, businesses will need to clearly set out (in one place):

• that the contract is recurring;
• how much and how often the consumer will pay;
• any minimum commitment period;
• how pricing may change; and
• how to cancel, including cooling-off rights and notice requirements.

For online sign-ups, there is an additional requirement: the final step must make it clear that the consumer is agreeing to ongoing payments. If they fail to do so, the contract may not be enforceable.

2. Cooling-off periods and refunds

Under the new regime, consumers will now benefit from separate 14-day 'cooling-off' periods:

• An initial cooling-off period – starting when the contract is first entered into, which is currently the rule for most distance/online sales with UK consumers; and
• A new renewal cooling-off period – triggered after a free/discounted trial ends, or the date when certain longer-term subscription contracts auto-renew.

During these cooling-off periods, consumers can cancel their contract without penalty. 

Businesses must also actively notify consumers of these rights, including how and when they can cancel. If those notices are not provided correctly, the cooling-off window may be extended until 14 days after the issue is addressed and for potentially up to 12 months.

Where a consumer cancels their subscription within a cooling-off period, refunds (including standard delivery costs) must be issued promptly to the original payment method, generally within 14 days.

Businesses are only entitled to reduce the refund in limited situations, such as where goods sealed for health protection or hygiene reasons have become unsealed after delivery. Importantly, consumers can cancel outside a cooling-off period if a business is found to be in breach of the new regime, and in particular fails to provide required up-front information about their legal rights.

3. 'Easy exit' and renewal

The DMCCA also places significant emphasis on making subscriptions easy to leave.

Businesses must ensure that:

• cancellation is straightforward and accessible;
• consumers are not required to take unnecessary or disproportionate steps to exit; and
• for online sign-ups, cancellation must also be available online.

To address concerns about consumers being trapped in recurring membership or subscription they no longer want, the regime introduces a mandatory requirement to issue renewal reminder notices – this must be before the end of any applicable trial period and at regular intervals, either every six months or a 'reasonable period' before each renewal payment.

These notices must also indicate when the next payment is due; how much it will be; how payments may change; and provide information on how the consumer can cancel their contract.

What steps should businesses take now? 

The Government is yet to publish any secondary legislation or further guidance, which should clarify some unanswered questions about the regime's application, although this is expected in autumn 2026.

However, the Prime Minister's announcement made it clear that the new regime will be in place 'in time for when customers often start new subscriptions for the year ahead', so the implementation window is likely to be narrow.

Businesses operating subscription models should therefore consider January 2027 as a potential compliance deadline and review:

• sign-up journeys (particularly online processes);
• consumer terms and conditions, including renewal provisions;
• cancellation mechanisms; and
• customer communications, including reminder notices.

While this does not mean the end for long term membership or subscription models, alongside existing regulations on unfair terms under the UK Consumer Rights Act 2015, the direction of travel is clear: businesses must ensure their subscription terms are as clear and easy to get out of as is reasonably possible.