Unless you are physically present in the UK or do business in the UK, just tell them to screw off. Treat their demands the same way you would an Iranian or Russian government bureaucrat demanding that you compromise the rights of your users. If they want authoritarian control over the internet, make them build their own great firewall.

Big tech companies are vulnerable to financial pressure, but a one admin Matrix server or XMPP server hosted in the US has no reason to comply.