Alongside restrictions on recruitment of care workers from overseas, and an increase in the base salary for certain eligible care staff from £23,200 to £25,000, further provisions have been introduced to close perceived loopholes relating to the payment of fees or the injection of investment funds by workers in connection with their sponsorship and visa applications.  

Thus we have a new Appendix Skilled Worker paragraph SW14.2A: 

Any money paid by the applicant to the sponsor (or a related organisation) will be considered as follows:  

(a) The following payments will be subtracted from salary, unless (c) applies:  

(i) deductions from salary; or  

(ii) repayments of loans; or  

(iii)investments.  

(b) Any such subtractions will be averaged over the length of time the applicant is being sponsored for, for the purpose of salary considerations. 

(c) Money will not be deducted where the payment is not related to business costs, immigration costs or investment, but rather an additional benefit offer which the applicant has a genuine choice whether to take up, for example salary sacrifice arrangements. 

The change will apply to applications with a Certificate of Sponsorship issued on or after 9 April 2025. 

The payments that are caught by this new provision will be averaged over the length of time the applicant is being sponsored for, for the purpose of salary assessment. This is not a ban on such payments. Rather, it will be necessary, if the business is paying fees on behalf of the worker, or the worker is providing investment into the business, to set a salary for them which – when the above deductions are made – meets or exceeds the relevant threshold and going rate.  

So for example, a web designer sponsored for 3 years must be paid a going rate salary of £41,300; if the employer covers their visa fees and Immigration Health Surcharge totalling £3,824, aiming to recover that via salary deductions, their going rate increases by that extra amount spread over the 3 years validity of the visa, so by £1,274.67 per year, increasing the salary that must be paid to £42,574.67.  There is no advantage in sponsoring over 5 years; fees total £6,595, which would increase the annual salary required by £1,319, giving a salary payable of £42,619.  

In practice, this kind of arrangement is likely to increase the employer’s tax and NI liability in relation to this employment, so there are obvious downsides. 

The Explanatory Statement to these rule changes states that the changes are being made “for consistency with how paid allowances for the same purposes are treated; to mitigate against sponsorship costs being passed on to applicants, and to close an unintended loophole whereby applicants could effectively pay towards their own salary through investing in their sponsor’s business.” 

It is however far from clear from the wording of the new Rules exactly what is intended to be caught here, and the terms used are wide. In relation to ‘immigration costs’, changes to the Sponsor Guidance already make it a breach of sponsor duties to pass on the costs of sponsorship to a Skilled Worker. Sponsorship costs in this context means the licence fee and any associated administrative (potentially including legal costs – in our view where the employee has no choice over the lawyer they must use), and the CoS fee. It has always been prohibited to pass on the Immigration Skills Charge.  

Nor is it clear whether ‘clawback clauses’, which allow a sponsor to take back these costs, or a proportion of them, on early ending of employment, would fall within this provision. A cautious reading may suggest that they would, where the clawback would be deducted from salary prior to the end of employment. 

The provision also catches money that the prospective sponsored worker has paid into the sponsor business, whether as a loan or investment. Again, the amounts paid would be averaged over the intended duration of leave, and then subtracted from eligible salary, thus increasing the proposed wage significantly in many cases.  

As mentioned, the Explanatory Memorandum states that this is ‘to close an unintended loophole whereby applicants could effectively pay towards their own salary through investing in their sponsor’s business’. This wouldn’t typically catch out the ‘self-sponsorship’ model by persons who are owners/majority owners of the sponsor business, except where they wish to put money into the business by way of investment alongside their sponsorship.  

It will however catch an individual who will pay an existing licensed business to create employment for them. Again, there is no prohibition on such an arrangement; the company will simply need to pay the worker a salary that takes the investment out of the equation.   

Another example: a licensed transport business seeks £50,000 funds for expansion, and intends to offer sponsored work to a potential investor who will take up a logistics manager role with them. The going rate for the job is currently £42,400; based on 5 years’ sponsorship, the gross salary the worker / investor would need to be paid is £52,400, £10,000 more than the stated going rate. 

The Home Office has in recent months taken a much more restrictive approach to self-sponsorship, and is now widening its scrutiny to the sponsorship / investment model. Note that the wording could also potentially cover other types of investment in a sponsoring business which are a form of employee benefit, such as share purchase schemes, or independent share purchase. The Home Office is likely to provide more clarification on this new provision in due course, and we will update our views once this is received. 

Call Latitude Law today on 0300 131 6767 or fill out our enquiry form and we will get straight back to you. Let our legal experts take the uncertainty out of your skilled worker visa application so you can start your successful journey towards residency in the UK today.