The UK Home Office has introduced several updates to the Sponsorship Guidance that significantly impact employers who hire international talent. These changes, which refine compliance requirements and sponsorship obligations, are particularly relevant for businesses planning to obtain or maintain a Sponsor Licence.
Although many of the updates overlap across these documents, together they reflect a comprehensive tightening of rules aimed at reducing abuses of the UK immigration system. Employers and potential sponsors must take note of the following changes to ensure compliance and avoid severe consequences.
Elimination of Cost Recoupment for Skilled Worker Sponsorship
One of the most notable updates concerns the costs employers can recover from sponsored employees. Previously, there was ambiguity around which expenses could be charged back to workers. However, concerns over exploitation have led the Home Office to implement new restrictions.
Effective for any costs incurred on or after 31 December 2024, sponsors are no longer allowed to pass on or recover:
- The Skilled Worker Sponsor Licence fee (including any fee for adding the Skilled Worker route to an existing licence) and its associated administrative costs (which explicitly cover premium services, such as priority processing of licence applications or the annual Premium Sponsor Service).
- The £239 fee for the Certificate of Sponsorship (CoS) for the Skilled Worker visa. Note that if a CoS was assigned before this date, any existing clawback agreement for that fee remains unaffected.
- The Immigration Skills Charge for both Skilled Workers and Senior or Specialist Workers, a rule that was already in place.
While the guidance does not provide a comprehensive definition of “associated administrative costs,” it does mention premium services as an example. This might also include professional legal fees incurred during the sponsorship application process. Importantly, these restrictions do not apply to the costs associated with a visa application or CoS assignment that occur outside the specified circumstances, meaning that under employment and contract law, expenses like priority service fees or legal costs might still be recoverable in those contexts.
Employers and their advisers must carefully review and, if necessary, update any clawback agreements to ensure they fully comply with the new rules and any transitional protections.
Stricter Criteria for Key Personnel
A significant overhaul has been made to the requirements for key personnel within sponsoring organisations, detailed in the rewritten Section L4 of the guidance.
Key points include:
- UK-Based and Employment Status
All key personnel, such as the Authorising Officer, Key Contact, and registered users of the Sponsorship Management System, must be based in the UK and either be paid staff or hold an office within the organization (with limited exceptions for third-party appointments).
- Combined Level 1 User Requirements
Previously, sponsors could nominate multiple Level 1 Users – allowing one to be a settled worker (for example, a legal representative) and another to fulfill the role of an employee, director, or partner. However, for all new sponsor licence applications submitted after 31 December 2024, at least one Level 1 User must simultaneously be an employee, director, or partner and be a settled worker (as defined in Part 2 of the guidance, meaning a British citizen, someone with an Indefinite Leave to Remain, or someone with settled status). Existing licences, granted on or before 31 December 2024, will continue to operate under the previous requirements until further alignment is mandated by UKVI.
- Additional Requirements
- Every nominated key personnel member must possess a valid National Insurance number unless they are exempt.
- Individuals who are legally barred from being company directors – unless they have court permission to act as such – are now prohibited from serving as key personnel.
- The new Sponsor UK system, which is currently being trialed under the Government Authorised Exchange (GAE) route, will not support Level 2 Users. As a result, sponsors should consider upgrading any existing Level 2 Users to Level 1 – since Level 1 Users cannot be third parties (with only limited exceptions, such as legal representatives).
- Every nominated key personnel member must possess a valid National Insurance number unless they are exempt.
These stricter criteria, especially the requirement for a combined Level 1 User role, may pose challenges for start-ups and overseas companies operating in the UK that lack readily available settled workers.
Prohibition on Sponsorship in a Personal Capacity
The updated guidance explicitly prohibits the use of a Sponsor Licence for hiring workers in a personal capacity. Specifically, Sponsor Licences must not be used in circumstances where:
- An individual or household seeks to employ or engage a worker for personal reasons without operating a broader business or service in the UK.
- The worker is employed or engaged for the personal benefit of an individual who works for the sponsor or a close relative or partner, in roles that are unrelated to the sponsor’s core business activities.
The only exception to this rule is for private servants in diplomatic households. Historically, individuals (except sole traders wishing to sponsor someone for their own business) could not become licensed sponsors, leading to workarounds where household roles – such as personal assistants, secretaries, nannies, carers, and cooks – were sometimes sponsored through alternative structures like family offices or by being employed by a related business. However, UKVI has grown increasingly strict about such arrangements, and these changes reinforce a clear boundary against sponsoring workers for personal employment.
For those ineligible for sponsorship under this provision, alternative immigration routes exist. These include non-sponsored options like UK Ancestry, Youth Mobility, Graduate, and High Potential Individual visas, as well as dependant / family visas. The Domestic Worker visa remains an option for certain household roles, though it is extremely limited. Additionally, changes made in April 2024 mean that SOC code 6116 – used for nannies and au pairs – no longer meets the minimum skill level required for sponsorship; this SOC code now can only be used to extend an existing Skilled Worker visa for an individual continuing in the same role with the same sponsor.
Expanded Definition of “You and Your” in Sponsorship Obligations
The revised guidance clearly outlines the responsibilities of sponsors, specifying that non-compliance by anyone covered by the definition of “you or your” can lead to a refusal of a licence application or revocation of an existing licence.
Previously, “you” referred to the owner, director, key licence personnel (such as the Authorising Officer, Key Contact, and Level 1 Users), and those involved in the organization’s day-to-day operations. Now, the definition has been broadened to also include any “person recorded on your Companies House profile as a Person with Significant Control.”
This addition means that during the Sponsor Licence application process, employers must conduct more thorough due diligence to ensure that all individuals identified on their Companies House profile meet the necessary compliance standards.
Additional Technical and Procedural Updates
Several further updates have been introduced that refine the operational aspects of sponsorship:
- Evidence of Immigration Status
With the cessation of biometric residence permits from 31 October 2024, the guidance now includes updated information on using eVisas, short-term vignettes, and ink stamps (for example, under the Creative Worker visa concession) to verify immigration status.
- Certificate of Sponsorship Category Renaming
The title for the CoS category on the Sponsorship Management System that relates to post-study sponsorship has been updated from “Tier 4/Student graduate switching to Skilled Work” to “Student course complete switching to Skilled Worker.”
- Licence Renewal and B-Rating Adjustments
With the elimination of the four-year renewal requirement for Sponsor Licences, enforcement practices have been adjusted. UKVI can now downgrade a licence to a B-rating and impose an action plan up to twice within any rolling four-year period.
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