Founder's Guide
to AI Policy and
Regulation

Top Tips for Founders

Tier 1: The Overview Copy link

State of Play Copy link

The headline: The UK is presenting itself as a "pro-innovation" jurisdiction for AI. The Government is seeking to capitalise on the country’s burgeoning tech sector by minimising regulation and making AI a fundamental component of its economic growth ambitions.

The context: As the world’s third most valuable startup ecosystem, the UK undeniably punches above its weight. Since taking office in July 2024, the Labour Government has put support for the AI sector at the heart of its economic growth mandate. The AI Opportunities Action Plan, commissioned and fully endorsed by the Government, commits to developing the UK’s sovereign AI infrastructure (with some compute capacity ringfenced for UK startups and scale-ups) and supporting widespread AI adoption. Digital technologies are also one of the eight “growth sectors” identified by the Government as areas for investment in its forthcoming Industrial Strategy.

The rules: The UK does not have any AI-specific legislation. As such, oversight of the technology currently falls exclusively to existing regulators. The Government has issued a strategic steer to regulators to prioritise growth, and has set up coordination mechanisms such as the Regulatory Innovation Office to accelerate the journey of innovative products to market.

What this means for founders Copy link

Although founders may need to navigate context-specific legislative frameworks and individual regulators when developing or deploying AI applications in the UK, there are no specific compliance obligations on AI systems developed or deployed in the UK. Founders can also benefit from the Enterprise Investment Scheme (EIS) and the Venture Capital Trust (VCT) scheme’s extension until 2035 - a sign of the Government’s commitment to investment into startups via tax-relief incentives.

Forward Look Copy link

The Government has big ambitions for the UK’s AI sector but could be constrained by a tight fiscal picture. The Prime Minister has staked the Government’s growth agenda on accelerating AI development and deployment. However, the squeezed public finances will constrain the amount of state-backed investment available for flagship initiatives contained in the AI Opportunities Action Plan and Industrial Strategy. Instead, the Government is likely to look to the private sector for capital, through policies to crowd in private investments.

The UK is seeking to align with the US’s deregulatory approach to AI under the Trump administration. The US Government has signalled a shift away from “AI safety” and towards “AI security”, i.e. protecting sovereign AI capabilities as a national security asset. In line with this, the UK Government’s promised “AI Bill”, set to introduce binding rules on frontier model developers, has been delayed, and the UK’s leading AI Safety Institute has also been renamed as the AI Security Institute. This may pave the way towards deeper collaboration on AI and critical technologies between the two countries.

The impact of generative AI on copyright and data laws is dominating the regulatory conversation. The Government is attempting to thread the needle between the UK’s strong creative lobby, who are opposed to any loosening of current copyright law, and AI developers, who argue that the UK’s restrictive copyright law hampers innovation by preventing them from training models in the UK. The issue of how to manage the trade-offs between boosting AI innovation and protecting data (including IP) is set to dominate UK AI regulation in the months ahead.

Timelines Copy link

25 February 2025: AI and copyright consultation closed.

Q2 2025: Updates to the Industrial Strategy are expected, including a “digital and technologies” sector plan.

Q2 2025: Data (Use and Access) Bill expected to become law.

Q2-Q3 2025: Consultation on a draft AI Bill (focusing on frontier AI regulation) expected to be introduced.

Q1-Q4 2025: Key recommendations from the AI Opportunities Action Plan to be implemented, following the timelines outlined in the Government’s response to the publication.

June 2025: The second part of the Government’s departmental “Spending Review” will be announced, which will set multi-year budgets and determine how much capital is available for flagship AI-related policies like the AI opportunities plan (including e.g. sovereign compute investment) and the Industrial Strategy.

Tier 2: The Details Copy link

Policy and Legislative Landscape Copy link

INITIATIVE	DESCRIPTION
AI White Paper	The AI White Paper, published by the previous Government in March 2023 and updated in February 2024, remains the baseline for the UK and sets out a light-touch approach to AI regulation. The White Paper empowers individual regulators to oversee the use of AI within their respective remits (e.g. the Information Commissioner’s Office oversees data protection in AI development and deployment) rather than creating one central regulator or piece of legislation to govern the technology. To maintain a unified approach, the White Paper requires regulators’ AI workstreams to adhere to five principles: safety, security and robustness; appropriate transparency and explainability; fairness; accountability and governance; contestability and redress. How these principles are interpreted and enforced is up to individual regulators to determine. In response to the White Paper, regulators have published strategic approaches to AI and set up dedicated units or workstreams to assess the impact of the technology on their remit.
Existing UK regulatory frameworks to consider	When AI products are developed using personal data, or when they are deployed, UK data protection legislation (the Data Protection Act 2018, and the UK GDPR) needs to be considered. Parts of the UK’s data protection legislation will be superseded by the Data (Use and Access) Bill once it has completed its parliamentary passage. The most important changes that founders may need to be aware of include changes to the use of personal data for scientific research and clarifications around safeguards for solely automated decision-making (which is generally understood as AI-enabled decision-making). Consumer protection regulations to protect consumer rights when buying goods or services (Consumer Rights Act 2015; The Consumer Protection from Unfair Trading Regulations 2008) Copyright and intellectual property legislation can affect what data you can use to train models used or developed in the UK (Copyright Design and Patents Act 1988) - this could be superseded by a new approach to the use of copyrighted data in generative AI training sets following the recent AI & copyright consultation Sector-specific regulations for, eg., financial services (Financial Services and Markets Act 2000) Product-specific legislation (such as for electrical and electronic equipment or medical devices) may apply to AI-enabled products
AI Opportunities Action Plan	The Government launched the AI opportunities review in July 2024 as a key part of its growth agenda, to identify how best to leverage AI to the UK’s strategic advantage and to outline what policy change and investment is needed to reach these ambitions. The resulting Action Plan, led by entrepreneur Matt Clifford in consultation with industry, was published in January 2025 and fully endorsed by the Prime Minister, with a timeline for implementation set out in the Government’s response. The Plan’s 50 recommendations include several recommendations of relevance to founders, including: National AI Champions: Supporting the development of "national champions" in frontier AI by creating a "UK Sovereign AI" unit to promote UK-based R&D and support UK-based AI entrepreneurs and researchers through access to compute power and data. Compute Supply: Securing sufficient compute power, by instituting “AI growth zones” to accelerate development of AI data centres and growing a UK AI research resource. Data access: Unlocking access to public and private datasets through the creation of a National Data Library (NDL). AI Talent: Identifying skills gaps, recruiting international talent via streamlined visas, and investing in domestic education and training.
Invest 2035: Industrial Strategy	The Government launched the Industrial Strategy green paper in October 2024 for consultation. The Strategy outlined eight priority “growth sectors” for the UK economy, identifying the “digital and technologies” sector as one of its priority areas for development. Over the course of 2025, plans for boosting the UK’s competitiveness in each of these growth sectors will be published. Alongside the Industrial Strategy, the Government also launched a “Technology Adoption Review” in December 2024 to gather evidence on the barriers to technology adoption across the growth sectors, with a view to making technology an integral part of implementing the Industrial Strategy across sectors.

Policymakers Copy link

NAME	DESCRIPTION
Department for Science, Innovation and Technology (DSIT)	Established to raise the profile of innovation and technology within Whitehall, DSIT’s priorities are to promote research and innovation (including by managing R&D budgets), to deliver physical and digital infrastructure, and to make the UK "the best place to start and grow a technology business". The Government's ambition is to make DSIT the "digital centre of Government" and both an "economic" and a "delivery" department, acting as a cross-Government coordinator for digitising public services and helping other Whitehall departments with digital aspects of their policy areas. In January 2025, DSIT published a “blueprint for a modern digital government”, setting out its next steps towards digitising public services. DSIT is increasingly focused on encouraging widespread AI adoption, through the work of the Responsible Technology Adoption Unit and guidance such as the AI Management Essentials tool, which supports organisations in responsible AI adoption.
AI Security Institute (AISI)	Embedded within DSIT, the AISI was established in November 2023 as a Government research organisation. The AISI’s mission is to advance publicly-beneficial research and monitoring on the risks associated with the most powerful models (so-called "frontier AI"), including in collaboration with international counterparts. It has a close partnership with the US AISI to jointly test advanced AI models, share research insights, model access and enable expert talent transfers. In February 2025, the Government announced that AISI would focus more narrowly on the national security risks of frontier AI, changing its name from the “AI Safety Institute” to the “AI Security Institute”.

Enforcers Copy link

NAME	DESCRIPTION
Information Commissioner’s Office (ICO)	The UK’s data protection authority oversees the regulation of personal and business data, as well as the UK’s international data adequacy relationships. Alongside its enforcement duties, the ICO offers best-practice guidance on ensuring AI systems are compliant with data protection laws and runs an innovation advice service (including a regulatory sandbox) to help businesses bring innovative, data-compliant products to market more quickly. In December 2024, the ICO published the outcome of its consultation into the legal basis of web-scraping for generative AI, with a focus on protecting data. Updated guidance following the ICO’s findings will be published in 2025.
Competition and Markets Authority (CMA)	The UK’s competition and consumer protection regulator. It has the power to investigate - and block - mergers and partnerships, launch reviews and investigations into markets where there are competition concerns, and protect consumers from unfair trading practices. The full list of CMA cases and projects can be found here. The CMA has instituted market investigations into two aspects of the AI value chain, through its AI Foundation Models review and the Cloud Services Market Investigation. Strategic Approach to AI: sets out and updates on the CMA’s approach to AI as it relates to competition and consumers. See their recent decisions here.
Ofcom	Ofcom is the UK’s communications and online safety regulator, with particular responsibility for overseeing the UK’s new online safety regime, telecoms and broadcast. This gives it responsibility over the intersection of AI with these areas, including deepfakes, online fraud and misinformation. Strategic Approach to AI: Ofcom published its strategic approach to AI in March 2024, outlining its priority areas of focus for generative AI.
Financial Conduct Authority (FCA)	The FCA is the UK’s lead financial regulatory body. It has begun to explore the potential benefits and risks of using AI in financial services and how existing financial regulation would apply to AI. It also monitors the adoption of AI throughout the industry. Strategic Approach to AI: the FCA published an update on its AI workstreams in April 2024, outlining its existing approach and its plans for the next 12 months.
Digital Regulation Cooperation Forum (DRCF)	The DRCF provides a cross-regulator coordination function, making it easier for the four regulators listed above to collaborate more easily on potentially overlapping responsibilities in the digital regulation space. The aim of the DRCF is to facilitate joined-up thinking between regulators on important cross-cutting digital topics (including AI), and to provide one voice on the UK’s digital regulation landscape to foster a pro-innovation regulatory environment. It has piloted an AI & digital hub, designed to be a “one stop shop” for innovative companies needing a single point of advice on regulatory issues that cut across traditional remits.

Innovation Champions Copy link

NAME	DESCRIPTION	FOUNDER FOCUS
ARIA	Established in January 2023, ARIA is a UK Government-linked R&D research funding agency. It operates independently to direct funding towards research programmes with potential for scientific or technological breakthroughs. The agency recently launched a programme focused on building a Safeguarded AI using a combination of scientific world models and mathematical proofs.	Check for funding calls related to Activation Partners or Opportunity Seeds. These provide founders and startups with opportunities for collaboration and funding.
Startup Coalition	Founded in 2010, the Startup Coalition (formerly known as Coadec) is an industry body for UK startups focused on campaigning to improve policy for tech startups and scaleups. The Startup Coalition is particularly vocal on issues related to access to talent, access to finances, startup friendly regulation, and accelerating innovation. The group has produced a more comprehensive document outlining its policy positions in The Startup Manifesto.	Join their community to help shape their narrative as they push tech-friendly policy and regulation
techUK	Founded in 2013 as the UK trade association, it brings together a network for innovation and collaboration across business, Government and other stakeholders "to provide a better future for people, society, the economy and the planet". They have a particular mission to ensure that the UK is the best country for tech companies to be based in.	Join their community to network with other tech founders and SMEs. Their New Government Hub is designed to help new MPs learn more about the tech sector.
UK Day One	Non-partisan think tank which aims to accelerate the UK’s growth and economic progress by crowd-sourcing innovative ideas from the science and tech community and bringing them into the policy landscape. They have recently released briefings on Bringing Science & Tech Talent to Government and UK Pensions: Funding the Future of UK Science and Technology.	Submit ideas for tech policies to inspire the policy briefings that they write.

Founder's Guide to AI Policy and Regulation