What it actually means
A data cap is a stated limit on the amount of data a service will pass in a billing period, measured in gigabytes (GB) or sometimes terabytes (TB). Hit the cap and one of three things usually happens. Your speed is throttled to a much slower tier, you pay an extra fee per GB you go over, or your service stops passing data altogether until the next billing cycle.
In UK home broadband, hard data caps are now rare. Almost every modern fibre package is sold as unlimited because the underlying Openreach connection isn't metered for typical home use. Where caps still genuinely apply is on mobile data plans (the 5GB, 30GB or 100GB you see on a SIM), on 4G and 5G home broadband where the connection runs over a mobile network, and on a small number of legacy or budget services. 'Unlimited' plans usually carry a fair use policy, which is a softer version of a cap. The provider reserves the right to manage your traffic if you're using the service in a way that isn't typical home or business use, for example running a commercial server on a residential plan.
At home
What this looks like in the house
If you've got teenagers, two TVs streaming at once, a games console downloading 90GB updates, and someone working from home, you find data caps quickly. The household felt cost is the moment the kids' film stops loading at 9pm because the cap throttled the line. On modern home fibre this is genuinely not a worry. Where it matters is if you're on a 4G or 5G home broadband plan as a stopgap before fibre arrives, because mobile-network plans still come with real limits.
In business
What this looks like at work
For an SME the question isn't usually 'is there a cap' but 'is the service designed around how we actually use it'. Cloud backups, video calls all day, EPOS systems and a guest Wi-Fi network burn through more data than most owners think. On fibre that's fine. On a 4G or 5G failover, a mobile-network primary, or a SIM-pooled business mobile plan, the data allowance shapes the bill over the life of your contract. Sense check the monthly data figure against your real usage before signing.