Appendix Skilled Worker Changes to Sponsor Licence

Sponsor Alert: Skilled Worker Rules Updated – Effective 9 April 2025

The Home Office has released new rules under Appendix Skilled Worker, along with changes to sponsor guidance. These updates affect salary deductions, worker investments, and who can pay sponsor-related fees. Here’s what you need to know.

1- Salary Deductions & Worker Investments

Paragraph SW 14.2A – Salary calculations will now exclude any money paid by the applicant to the sponsor, including:

• Deductions for business costs, immigration costs, or investments
• Payments that appear to subsidise either the applicant’s own salary or the sponsor’s immigration expenses
  These amounts will only not be subtracted if BOTH conditions apply:
  • The payment is not related to business costs, immigration costs, or investment; and
  • The applicant genuinely chose to give up part of their basic pay in return for benefits as part of a salary sacrifice scheme

Paragraph SW 14.5(a) – Transitional Rule for Tier 2 (General) Migrants: These workers can still count allowances towards salary, but only if all of the following apply:

• They are applying to extend with the same sponsor
• The application is made before 1 December 2026
• The allowances are guaranteed
• The allowances will be paid for the full period of permission (i.e., not one-off or pro-rated bonuses)
• The allowances would be paid to a local settled worker in similar circumstances (e.g., London weighting)

If a sponsor includes these types of allowances but the transitional provision does not apply, the Home Office may give the sponsor an opportunity to amend the salary package.

Note: The rules don’t define what qualifies as ‘money paid by the applicant to the sponsor’, so the safest reading is that it refers to any funds paid directly from the worker to the sponsor or a related organisation.

2- Sponsor Guidance Reinforces Deduction Rules

9 April 2025 update to Workers and Temporary Workers: Sponsor a Skilled Worker guidance includes:

Paragraph SK7.6: Salary will be reduced if the worker makes any of the following payments to the sponsor or a related organisation:

• Deductions for business costs, immigration costs, or investment
• Repayments of loans made for any of the above
• Investment in the sponsor or a related organisation

Paragraph SK7.7: These deductions will be averaged over the full sponsorship period as stated on the worker’s Certificate of Sponsorship (CoS).

Paragraph SK7.8: Money won’t be deducted if:

• The payment is unrelated to business, immigration, or investment; and
• It is part of a genuinely optional benefit (e.g., salary sacrifice).

Any arrangement must not reduce pay below the National Minimum Wage.

3- “Related Organisations” & Lack of Definition

No definition has been provided yet for ‘related organisation’. It may include parent companies, corporate groups, or shareholding entities.

Until clarified, avoid investments into the sponsor or associated businesses unless salary levels still exceed thresholds after deductions.

Example: £50,000 investment over 5 years = £10,000/year deduction. Worker must earn at least £10k above the threshold.

4- Sponsor Licence Fees: Now Restricted for ALL Routes

From 9 April 2025, sponsors must not reclaim any of the following fees from workers:

Paragraph L6.17:

• Sponsor licence fee (including for adding Skilled Worker or any other route)
• Associated administrative costs
• Certificate of Sponsorship fee
• Immigration Skills Charge

Applies to all sponsored routes, including Global Business Mobility, Minister of Religion, International Sportsperson, Scale-up, and Seasonal Worker.

Violations may result in licence revocation.

5- Sponsor Licence Fees: Now Restricted for ALL Routes

Paragraph L6.18 defines associated administrative costs as including:

• Premium or priority service fees
• Legal advice related to the sponsor licence
• Immigration services provided where the worker had no genuine choice

Need help staying compliant? Speak to Five Star today, call Dan or Teresa on 0141 339 7373.

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