Sponsor licence fees explained

08.07.2020

From 1 January 2021, the UK will end free movement of workers from the European Union and implement a new points-based immigration system. This new immigration system will bring significant changes to the way businesses hire skilled workers from overseas, and employers will need to adjust and take note of sponsor licence fees linked to skilled worker recruitment.

Under the new rules, any UK businesses wishing to hire EU or non-EU workers must hold a valid sponsor licence. Employers who are not currently approved sponsors are encouraged to apply for a licence now if they think they will want to sponsor skilled migrants from early 2021.

As employers begin to prepare themselves for hiring overseas talent under the new system, a key concern for many businesses will be the costs involved with becoming an approved sponsor.

How much does it cost to apply for a sponsor licence?

Businesses applying for a sponsor licence are required to pay a fee when submitting their application online. This charge is for the Home Office to consider the application, and will not be refunded if the application is refused, or if the applicant withdraws after consideration has already begun.

The amount payable depends on the size of the organisation applying, and a reduced fee is available for smaller companies and organisations with charitable status. Organisations are usually classed as a small business if they have an annual turnover of £10.2 million or less and employ 50 staff or fewer.

Currently, the application fee for a small or charitable sponsors is £536, and a higher fee of £1,476 applies for medium or large sponsors. Further details on sponsor licence fees can be found on the government website here.

It is essential to select the correct size or type for your organisation when submitting your application, as this will determine not only the application fee you have to pay, but also other costs throughout the life of your licence.

What other costs are involved?

As well as paying for the initial application fee for a sponsor licence, businesses will also be charged a fee when they:

Apply to renew an existing sponsor licence – Renewal fees are charged at the same level as your initial application fee.
Apply to extend the scope of an existing sponsor licence – Medium or large sponsors with an existing Tier 5 licence can apply to add Tier 2 to their existing licence for £940.
Assign each Certificate of Sponsorship (CoS) – The cost of issuing a CoS is currently £199.

Sponsors may also be required to pay an Immigration Skills Charge for each foreign worker they employ. Again, the amount charged will depend on the size of the organisation.

Currently, the Immigration Skills Charge for small or charitable sponsors is £364 for the first year of employment, plus £182 for each subsequent six month period. Medium or large sponsors are required to pay the larger fee of £1,000 for the first year plus £500 for each additional six month period.

Employers should also consider the other costs involved with sponsoring overseas workers under a Tier 2 skilled work visa, such as the visa application fee and the Immigration Health Surcharge for the applicant and any dependents. These costs are usually down to the worker to pay, however some employers will opt to pay these fees on behalf of their employee.

It should be noted however that employers cannot lawfully pass sponsor licence fees such as the Immigration Skills Charge onto the migrant worker. Any sponsors found to have done this may have their licence revoked.

More information on sponsor licence can be found in the Home Office Guidance for Sponsors.

Expert advice on becoming an approved sponsor

It’s important to bear in mind that fees are charged for every application for a sponsor licence and that this fee will not be refunded if the Home Office refuses your application. For this reason, getting your application right first time is key to keeping costs down for your business.

If your business is looking to secure a sponsor licence in preparation for 2021, Smith Stone Walters can help. Our team of immigration consultants have helped hundreds of organisations submit successful sponsor licence applications, and will guide your company through every step of the application process and beyond.