If you’re a UK business owner, the thought of an AI “reading” your company files probably makes you at least slightly uneasy.
You’re likely picturing a scenario where a junior intern asks Copilot about company salaries and gets a neatly formatted table in return.
Let’s be blunt: if your digital filing system is a shambles, that’s exactly what will happen. Copilot doesn’t “leak” data; it surfaces it. It follows the permissions you’ve already set. If your “Confidential” folder is accidentally shared with “Everyone,” Copilot is just the messenger.
Here is how to lock down your data so you can enjoy the productivity gains without the heart palpitations.
1. Get your licensing sorted
First things first: your license matters. For most UK small businesses, Microsoft 365 Business Premium is the sweet spot. Why? Because it includes the “big guns” of security – Microsoft Purview and Microsoft Entra ID.
While Business Standard gets you the AI, Business Premium gives you the “governance” tools to control it. It’s the difference between buying a fast car and buying one that actually has brakes. If you’re serious about data safety, this is the kit you need.
2. The great permissions audit, and the “just enough access” rule
Copilot uses a “Semantic Index” to understand your business. It only looks at what the specific user has permission to see.
Before you roll out the licenses, you need to conduct a Data Access Audit.
Kill the “Everyone” links: We’ve all shared a folder with the “Everyone except external users” setting because it was easier than typing names. Stop this immediately and apply the Principle of Least Privilege: Users should only have access to the data they need to do their jobs. A graphic designer doesn’t need access to the P&L statements.
Run a “Search Discovery”: Use the “Data Access Governance” reports in your admin center. It will show you which sensitive files are “overshared.” Clean this up before the AI arrives.
3. Sensitivity labels: Teaching the AI to “shhh”
This is where Microsoft Purview earns its keep. You can create Sensitivity Labels—like Public, Internal, Confidential, and Highly Confidential.
When you tag a document as “Confidential,” Copilot respects that label. If a user asks for a summary of a labelled document, the AI will carry that label over to the summary it creates. More importantly, you can set “Data Loss Prevention” (DLP) policies that prevent Copilot from even touching files tagged with specific labels, or prevent that data from being copied out of your secure environment.
4. UK GDPR and the “sovereignty” question
One of the biggest myths is that Microsoft uses your business data to train the “public” ChatGPT. They don’t.
In the UK, we’re governed by the UK GDPR and the newer Data (Use and Access) Act 2025. Microsoft’s “Commercial Data Protection” means your data stays within your “tenant.” It doesn’t leak into the global AI model. It’s like having a personal assistant who lives in your office and is sworn to secrecy, rather than a temp who blabs at the pub.
5. Cyber Essentials: The British Standard
If you really want to sleep at night, align your Copilot setup with the UK Cyber Essentials scheme. By 2026, most government contracts and large supply chains require this.
Multi-Factor Authentication (MFA) should be a non-negotiable. If a hacker gets into an account, they don’t just get the emails; they get an AI that can find every sensitive document that person ever touched. MFA is your primary wall.
Conditional Access: Use Entra ID to say, “You can only use Copilot if you’re on a company-managed laptop and physically located in the UK.”
6. The human element: Prompt engineering and ethics
Finally, tech can only do so much. You need an Acceptable Use Policy that’s implemented across your business, and not just filed and forgotten about. This should include the importance of teaching staff that just because Copilot found a piece of info, doesn’t mean they have permission to share it further.
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