While the European Union rolls out its sweeping AI Act with characteristic regulatory zeal, thousands of UK businesses are left scrambling to figure out what it means for them. The reality? If you’re a British company using AI and have even a single customer in the EU, you’re caught in Brussels’ regulatory net. No exceptions.

The stakes couldn’t be higher. Non-compliance could cost companies up to 7% of global turnover or €30 million—whichever hurts more. That’s real money. And with around 3,000 AI firms operating in the UK market, the impact is massive.

Penalty-packed regulations with teeth—7% of turnover gone with one regulatory misstep.

The EU didn’t design this legislation with British convenience in mind. The rules apply in phases, starting with immediate bans on certain AI systems deemed too risky. Within a year, requirements kick in for generative AI. Twenty-four months later, high-risk AI systems face strict compliance demands. Clock’s ticking.

Risk classification isn’t optional. Companies must figure out whether their AI systems fall into the high-risk category—think healthcare, transportation, or anything that could seriously impact human safety. High-risk designation means more paperwork, more oversight, more headaches.

Meanwhile, the UK is still figuring out its own AI regulations. British businesses are stuck in regulatory limbo, potentially facing two different compliance regimes. Double the fun, double the expense.

Enforcement isn’t theoretical. Each EU member state will appoint authorities to monitor compliance. They’ll be watching, keen to make examples of non-compliant businesses. It’s GDPR all over again, but with sharper teeth.

The EU’s risk-based system for AI oversight creates a tiered approach that determines exactly how stringent the compliance requirements will be for each application.

The extraterritorial reach of the EU AI Act means UK businesses can’t just ignore it. If your AI outputs touch the EU market, you’re in. Simple as that. Post-Brexit UK may have left the EU, but British businesses haven’t escaped its regulatory gravity.

The AI Act is coming, ready or not. And it’s bringing hefty compliance costs with it. For small and medium-sized enterprises, these costs are expected to reach 1-3% of turnover, adding another financial burden to businesses already navigating post-Brexit challenges.