The Home Office has issued updated sponsor guidance, with a number of key changes to the visa sponsorship regime impacting UK organisations that hold, or are applying for, sponsor licences.
Revised Rules on Recovering Sponsorship Costs
Employers are no longer allowed to transfer or recover certain sponsorship-related expenses from sponsored employees. The prohibited costs include:
- Certificate of Sponsorship (CoS) fees. Applicable for CoS issued on or after 31 December 2024.
- Skilled Worker sponsor licence application fees and associated administrative costs, including charges for premium services, where the sponsor recoups/attempts to recoup these costs on or after 31 December 2024, irrespective of when the fees were initially incurred. Any attempt to recoup such costs after the deadline will be deemed non-compliant.
Costs tied to the visa application, such as the Home Office processing fee and the Immigration Health Surcharge, can still be legitimately passed on to the worker.
The Immigration Skills Charge remains beyond the scope of any clawback provision. However, costs incurred directly in relation to the individual’s application, such as the Home Office processing fee or Immigration Healthcare Surcharge, may still be passed onto, or recouped from, the worker.
Employers found to be in breach of these restrictions face a potential licence revocation, which can severely disrupt operations and recruitment strategies.
To mitigate risks, employers are encouraged to perform a thorough review of their current practices, including clawback clauses and financial policies, and implement appropriate revisions. Employers should seek expert advice to clarify ambiguities around specific costs and foster transparent communication with employees regarding financial arrangements.
Expanded Definition of “You and Your” in Visa Sponsorship
The Home Office has broadened the definition of what constitutes a ‘sponsor’. While the term previously covered owners, directors and designated key personnel (e.g., Authorising Officers and Level 1 Users), it now includes individuals identified as Persons with Significant Control (PSC) on the organisation’s Companies House profile.
This change reflects the Home Office’s aim of ensuring that all individuals with significant influence over the organisation are accountable for compliance. Employers should verify the accuracy of their Companies House records and ensure all listed individuals understand their sponsorship responsibilities.
Updates to Key Personnel Criteria
Effective from 1 January 2025, at least one Level 1 User on a sponsor licence must be both a director, employee, or partner within the organisation and hold “settled worker” status, such as British citizenship or indefinite leave to remain.
Previously, these requirements could be fulfilled by separate individuals. Under the revised rules, they must now be met by a single person.
In addition, the guidance states that individuals acting as key personnel must not be legally barred from acting as company directors unless court permission has been granted.
The guidance also formally reiterates previous instructions on the SMS that a valid National Insurance number is mandatory for all key personnel, unless they are exempt.
Strictly speaking, these changes only currently apply to organisations applying for a sponsor licence on or after 31 December 2024. However, there is suggestion in the guidance that this may be reviewed and extended to apply to all sponsors. As such, sponsors are advised to review their Level 1 users to determine if this revised requirement is met.
These changes are likely to present new challenges, particularly for smaller businesses and start-ups with limited personnel in the UK to select from. We can advise if you are unsure about the new requirements, and if you are precluded from a Skilled Worker sponsor licence due to the key personnel restrictions, we can help yon consider alternative routes – such as the Expansion Worker route for overseas companies.
Existing licence holders should prioritise identifying suitable individuals within their organisation in light of the new rules and, if necessary, provide appropriate training to ensure compliance.
Finally, with the ongoing implementation of the new “Sponsor UK” system, organisations should prepare for the removal of Level 2 User roles, as only Level 1 users will be transitioned to the new system, and ensure all necessary staff meet the enhanced Level 1 User criteria.
Ban on Personal Capacity Sponsorship
In line with the spirit of the sponsorship regime, that sponsor licences are intended only for legitimate business needs and should not be exploited for personal arrangements, employers are now explicitly barred from using a sponsor licence to employ workers in a personal capacity. This includes:
- Roles benefiting an individual or household where the sponsor is not engaged in business or service activities
- Positions unrelated to the organisation’s core activities, such as nannies, housekeepers, or personal assistants employed for private purposes.
An exemption exists for private servants working in diplomatic households. Employers operating in this context must ensure compliance with the specific rules governing these roles.
Organisations that previously sponsored workers in a personal capacity can no longer assign CoS for such roles. Failure to adhere to this regulation could result in licence revocation. Employers should update their internal policies and communicate these changes to all relevant parties.
Additional Updates
The guidance also included additional updates regarding visa sponsorship.
Defined CoS must be issued within 90 days of allocation, replacing the previous three-month guideline. Employers must establish robust internal processes to meet this updated requirement.
The guidance has also revised the title of the Certificate of Sponsorship category on the Sponsorship Management System for post-study sponsorship to “Student course complete switching to Skilled Worker,” replacing the previous “Tier 4/Student graduate switching to Skilled Work.” The earlier title’s reference to “graduate” had caused confusion, leading sponsors to mistakenly select it for workers switching from the Graduate route instead of those completing a Tier 4/Student course. This misunderstanding sometimes resulted in delays or refusals, as the option exempted the Immigration Skills Charge.
Following the removal of the renewal requirement, licences can now be B-rated and subject to an action plan twice within any rolling four-year period. This change, introduced in the October guidance update, has now resolved inconsistencies in paragraphs C8.22 and C8.24.
Finally, employers are reminded to familiarise themselves with the eVisa transition rules, notably the phase out of Biometric Residence Permits (they have no longer been issued since October 2024). Employers should review their right to work procedures and provide personnel training as required to ensure compliance with the new digital verification system.
Need Assistance?
These changes clearly align with the Home Office’s renewed emphasis on compliance and ethical use of sponsorship licences. To stay compliant and mitigate risks, employers should:
- Conduct a comprehensive review of internal policies, employment contracts and sponsorship processes.
- Ensure key personnel are not only eligible but adequately trained to fulfil their responsibilities.
- Avoid any misuse of sponsor licences for personal employment purposes.
For specialist guidance on the new rules and how they impact your organisation, contact our immigration compliance experts.
Author
Founder and Managing Director Anne Morris is a fully qualified solicitor and trusted adviser to large corporates through to SMEs, providing strategic immigration and global mobility advice to support employers with UK operations to meet their workforce needs through corporate immigration.
She is a recognised by Legal 500 and Chambers as a legal expert and delivers Board-level advice on business migration and compliance risk management as well as overseeing the firm’s development of new client propositions and delivery of cost and time efficient processing of applications.
Anne is an active public speaker, immigration commentator, and immigration policy contributor and regularly hosts training sessions for employers and HR professionals
