Recent changes to company size thresholds have significant ramifications for the Immigration Skills Charge and the overall cost to businesses of sponsoring migrant workers.
The Immigration Skills Charge (“ISC”) is a fee that sponsor employers must pay when sponsoring workers on the Skilled Worker or Global Business Mobility – Senior or Specialist Worker routes (with some minor exceptions).
The amount of the ISC varies depending on the size of the sponsor organisation. Small and charitable sponsors must pay £364 per year of the worker’s visa, while medium-sized and large sponsors must pay £1,000 per year of the worker’s visa – although it should be noted that the ISC is paid as a lump sum up-front, on assigning the worker’s Certificate of Sponsorship, rather than being an annual fee.
The distinction between a small and medium-sized company can therefore have a significant impact on the cost associated with the ISC. For example, a small company sponsoring a worker on a five-year visa would only have to pay an ISC of £1,820. On the other hand, a medium-sized company sponsoring the same worker for the same amount of time would have to pay an ISC of £5,000 – almost triple the cost!
This distinction is particularly important given that, unlike some other immigration costs, the ISC must be paid by the sponsor employer and cannot be recovered from the sponsored worker. A sponsor who attempts to offload the burden of these costs onto a sponsored worker risks their sponsor licence being revoked, with all their sponsored employees having their visas curtailed.
The definition of a “small company” is set out at section 382 of the Companies Act 2006. Whether a company qualifies as “small” depends on three factors: their annual turnover, their balance sheet total, and the average number of employees they have across the financial year.
Previously, a company would only qualify as “small” if at least two of the following criteria were satisfied:
- Turnover of no more than £10.2 million.
- A balance sheet total of no more than £5.1 million.
- An average of not more than 50 employees across the financial year.
However, these thresholds were recently tweaked, with the new thresholds having come into force on 6 April 2025. Now, a company will qualify as “small” if at least two of the following are satisfied:
- Turnover of no more than £15 million.
- A balance sheet total of no more than £7.5 million.
- An average of not more than 50 employees across the financial year (no change).
As a result of these changes, far fewer companies will surpass the increased thresholds for turnover and balance sheet totals, meaning that an increased proportion will fall within the “small company” definition. Because of this, many sponsors that previously had to pay £1,000 per year of a worker’s visa will now be able to pay the much-reduced £364 rate for small sponsors, allowing them to make a significant saving when sponsoring migrant workers.
However, it is highly unlikely that the Home Office will implement these fee changes automatically, and many sponsors will therefore continue to pay the higher rate when they don’t have to.
If you are a sponsor, we would recommend reviewing whether your business now falls within the “small company” definition – if it does, we would urge you to report this on the Sponsorship Management System (“SMS”) as soon as possible, to ensure that you pay the reduced rate of the ISC going forward. Unfortunately, reporting a change in organisation size is not currently eligible for priority processing, and therefore it may take up to 18 weeks for the change to be reflected on the sponsor licence.
As a sponsor, you are also under a general obligation to report such changes within 20 working days. If your business fell within the “small” company definition upon the threshold changes on 6 April 2025, then you have 20 working days from that date to report the change in your organisation’s size on the SMS – meaning that you must report the change by 6 May 2025. Failing to report this change by this deadline could result in the revocation of your sponsor licence.
The Home Office have also said that they will issue partial refunds to those sponsors who initially paid the increased rate of the ISC when assigning a Certificate of Sponsorship, but who have since fallen within the “small company” definition – but only if you notify them of this change in size. For organisations that have sponsored multiple workers in recent years, and whose size has reduced as a result of the threshold changes, it is possible that there are thousands of pounds worth of partial refunds waiting to be claimed.
If you have any questions about the Immigration Skills Charge, reporting a change in company size to the Home Office, or claiming a partial refund, please get in touch at [email protected]
