If you are a sole trader, or in a basic partnership, and your business gets into financial difficulty, any liabilities that can't be covered by the sale of business assets might have to be settled out of personal assets.
There is no automatic protection for your personal assets.
Recently The Office for Tax Simplification (if only this were true!) put forward a proposal that sole traders should be able to elect for a form of limited liability status to allow them to protect their homes from any claims made by business creditors. Although we aren't sure how this would work in practice the mere fact that it's even being considered is a welcome step.
Alternatively, a sole trader or an unlimited partnership can already consider if they should incorporate their business, and convert to a Limited Company status.
However, this does create additional compliance costs in both time and money: Limited Company accounts have to be drawn up in a statutory format and filed at Companies House and tax planning will need to be reconsidered.
It has always been the case that for businesses where any commercial risks can't be adequately covered by insurance incorporated status should be considered. It may well be that what has served well in the past can still do so in the future, but we recommend that you regularly reassess your risks, just in case there is an argument for change.