Microsoft 365’s July 2026 Changes, Explained Plainly
Bigger mailboxes, higher prices and a quiet reshuffle of what’s included. What changed in July, where each part stands now it has rolled out, and the add-on licences you may be able to cancel.
Published: 2 July 2026 Updated: 6 October 2026
On 1 July 2026 Microsoft’s new Microsoft 365 prices took effect, and over the summer a set of new inclusions rolled out alongside them. By the end of September most of it had landed. The detail was spread across blog posts, message-centre notices and licensing documents, so here’s the plain-English version: what changed, who it affects, and what’s worth doing about it now.
Updated October 2026. We first published this on 2 July. Now the rollouts have finished, we’ve brought it up to date: the E3 Intune additions arrived earlier than first signalled, Security Copilot is now live in E5, the archiving and Copilot details have been corrected, and there’s a new section on what’s changed since.
Business mailboxes doubled to 100GB, and some licences became redundant
The headline change for SMEs: mailboxes on Microsoft 365 Business Basic, Business Standard and Business Premium doubled from 50GB to 100GB per user. The rollout finished at the end of September (Exchange Team blog).
That sounds like a storage footnote. It isn’t. It’s a billing change in disguise. Until now, when a user hit the 50GB ceiling, the standard fix was to buy them an Exchange Online Plan 2 licence, which carried a 100GB mailbox. Plenty of businesses have a scattering of these add-ons, bought one full mailbox at a time and long since forgotten. If size was the only reason a user holds Plan 2, that spend is now redundant.
Two things to check before you cancel anything. Custom mailbox quotas are kept, so a user someone once capped at 50GB stays there until the quota is changed. And quotas don’t stack: two licences don’t make a 200GB mailbox. Standalone Exchange Online Plan 1 users also stay at 50GB.
Plan 2 does still add things beyond size, chiefly litigation hold and an auto-expanding archive of up to 1.5TB. Business Premium already includes both, so Plan 2 add-ons on Premium users are almost always pure saving. On Basic or Standard, if a user genuinely needs hold or a large archive, the cheaper Exchange Online Archiving add-on usually covers it.
Most prices went up. Business Premium didn’t.
At Microsoft’s US dollar list prices, Business Basic rose from $6 to $7 per user per month, Business Standard from $12.50 to $14, Microsoft 365 E3 from $36 to $39 and E5 from $57 to $60 (Microsoft 365 blog). UK pricing follows the same shape with currency adjustment, and what lands on your invoice depends on your agreement and partner.
The notable exception is Business Premium, which didn’t move. It was already the strongest-value plan for most SMEs, because its security and device-management features are exactly what Basic and Standard lack. Standing still while everything around it rose makes that case stronger.
On timing: annual-term subscriptions under Microsoft’s New Commerce Experience pick up the new price at renewal, not mid-term, and monthly-term subscriptions repriced at their first renewal after 1 July. Sterling prices are also now reviewed once a year, every January, with guidance the November before (Microsoft). So the dates to watch are your own renewal, and 1 January 2027.
E3 absorbed tools you may be paying for separately
Microsoft 365 E3 gained Microsoft Defender for Office 365 Plan 1, the layer that adds serious phishing, malicious-link and attachment protection to Exchange Online, plus Intune Plan 2, Intune Remote Help and Intune Advanced Analytics. Office 365 E3, the plan without Windows and Intune, gained Defender for Office 365 Plan 1 only.
A correction to our original version: we said the Intune capabilities would roll out from October. In the event Microsoft included them from 1 July and existing tenants had access by August (Intune blog). So if you’re still paying for a separate remote-assistance tool that does what Remote Help does, that’s duplicated spend today.
Defender for Office 365 Plan 1 switches itself on with Microsoft’s built-in protection settings as it reaches each tenant (Defender blog). If you run a third-party email security gateway in front of Exchange, check mail flow and decide deliberately which layer does what, rather than paying twice for overlapping filtering.
Worth saying plainly for SMEs: Business Premium didn’t receive any of these Intune additions. They’re an Enterprise-plan story.
E5 got the biggest security additions
E5 received everything E3 did, plus three pieces of the Intune Suite that were previously paid add-ons: Endpoint Privilege Management, Enterprise Application Management and Microsoft Cloud PKI, all now live.
Endpoint Privilege Management deserves a plain-English explanation, because it addresses one of the most common real-world weaknesses we see: users with permanent local admin rights on their laptops, usually granted years ago so one awkward application would install. Standing admin rights are a gift to malware. EPM replaces them with just-in-time elevation: the user requests, the specific action is approved, and nobody walks around with permanent admin. These three didn’t come to E3, so an E3 organisation that wants EPM still needs the standalone add-on or a move to E5.
Security Copilot is now included for E5 too (Microsoft Learn). The allowance is 400 Security Compute Units per 1,000 users per month, scaled down for smaller tenants, so a 50-user E5 business gets around 20. That’s enough to explore what it’s good at. It isn’t a security operations centre in a box.
Copilot Chat: useful, and worth switching on thoughtfully
Microsoft 365 Copilot Chat is included across the business plans, and earlier this year Microsoft added agents for Word, Excel and PowerPoint that you work with from the chat, rather than Copilot inside the apps themselves. Business Basic and Standard also gained URL safety checks in email and Office apps, a lighter version of protection Business Premium already had. Our original version overstated how much of this arrived on 1 July; most of it landed between January and March.
Copilot’s access follows the user’s access. If your file permissions are a mess, Copilot becomes a very efficient way for staff to find documents they were never meant to see. Tidy governance first, clever assistants second. (More on that on our practical AI page.)
What’s changed since July
- Copilot bundles. Business Standard with Copilot and Business Premium with Copilot became available on 1 July, as annual subscriptions for up to 300 users (Microsoft). Worth pricing against the separate add-on if Copilot is on your list.
- Copilot billing. Microsoft is moving Copilot towards usage-based billing alongside per-user licences. For new Copilot Business licences bought through a Microsoft partner, usage billing is due to be on by default from 1 December 2026 (Microsoft). Set limits deliberately rather than discovering them on an invoice.
- Basic-auth email sending. Exchange Online plans to switch off SMTP basic authentication by default at the end of December 2026 (Exchange Team blog). Scan-to-email copiers and older business applications are the usual casualties. Find them now, not on the first working day of January. Our SMTP basic auth guide covers how, and the fixes.
- Office LTSC 2021. The one-off-purchase version of Office reaches end of support on 13 October 2026, the same day Windows 10’s first paid year of extended updates ends. We’ve covered that in Windows 10 extended security updates: year one ends on 13 October.
What to do now
Audit your add-ons. Everything has now landed, so this is the moment. List every Exchange Online Plan 2, Defender for Office 365, and remote-assistance or privilege-management tool you pay for separately, and check each against what your plans include. This is where the money is.
Check mailbox quotas. Make sure old custom quotas aren’t holding anyone at 50GB.
Check your renewal date, and January. Price changes land at renewal, and sterling prices are reviewed every January. Get the plan mix right before you lock in another year.
Find anything still sending email with basic authentication before the December change.
Revisit the E3 vs E5 maths if you’re on Enterprise plans. The capability gap narrowed and the prices moved. Last year’s decision is out of date.
If you’re on Business Premium, smile. Same price, bigger mailboxes. And if you’re on Basic or Standard because nobody ever reviewed it, this is a good prompt to check whether Premium’s security features are worth the step up. For most SMEs we assess, they are.
The quiet story of every Microsoft licensing update is the same: the suites keep absorbing the add-ons. The savings are real, but only for businesses where someone reads the changes and walks the licence list. That’s the job.
Not sure what your tenant is licensed for, or paying for twice? Our Microsoft 365 service includes exactly this kind of licence housekeeping, or start with a free health check and we’ll look for you.
Paying for something the licence now includes?
The savings only land if someone walks the licence list. That’s exactly what our Microsoft 365 service does — or start with a free health check.