New Immigration Rules for Skilled Workers: Further Challenges for Self-Sponsorship
In This Article
1. New Restrictions on Salary Calculations for Self-Sponsored Skilled Workers
2. What this means for Employers and Skilled Worker Applicants
3. The UK’s Shifting Stance on Business Migration and Investment
4. Contact Our Immigration Barristers
The Self-Sponsored Skilled Worker visa has been a popular route for skilled business persons to set up / run their own business and have that business sponsor their visa.
As with all Skilled Workers, self-sponsored workers have to be paid a salary in line with the General Threshold / Going Rate for their job code, and as stated on their Certificate of Sponsorship.
How ‘salary’ is assessed is soon to be amended.
1. New Restrictions on Salary Calculations for Self-Sponsored Skilled Workers
The March 2025 Statement of Changes will introduce a new Rule to Appendix Skilled Worker to follow SW 14 (which sets out what salary ‘does not include’).
The new Rule states as follows:
“SW 14.2A. 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 Explanatory Memorandum sets out:
Changes are also being made to the rules concerning deductions from an applicant’s salary. These 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.
This change is clearly targeting self-sponsors, who have previously been able to inject capital into a business to cover start-up costs, potentially including salary costs etc. in the early stages of business. The ‘genuineness’ assessment of work has always been a factor they have had to meet in the course of a licence application, and this has previously considered the availability of funds to the business. The new approach will change this significantly.
The changes shall take effect on 09 April 2025. In relation to those changes, if an application for entry clearance or permission to stay has been made using a certificate of sponsorship issued by a sponsor to an applicant before 09 April 2025, or if an application which does not require a certificate of sponsorship has been made before 09 April 2025, such applications will be decided in accordance with the Immigration Rules in force on 08 April 2025.
2. What this means for Employers and Skilled Worker Applicants
While there is little information other than investments will be ‘deducted’ on an ‘averaged’ basis over the duration of sponsorship, there will no doubt be changes to the Sponsor a Skilled Worker Caseworker Guidance and the Workers and Temporary Workers (Parts 1 – 3) Guidance to furnish this detail. Today, it is not clear if a Skilled Worker invests £50,000 into a business and their sponsored role is for 5 years with a salary of £50,000pa, whether they have to essentially be paid £60,000pa by the Company to make up for the “average” deduction of investment (£10,000 for each of the five years of sponsorship), or whether there will be some other calculation.
It may become necessary for Skilled Worker Applicants considering setting up a company to sponsor themselves, to obtain external investment if the business is not sufficiently revenue-generating to cover their salary in the early stages. Focus for migrants switching to the Skilled Worker route in-country should likely be on generating sufficient revenue so that personal investment is not required, but for Skilled Workers moving from overseas that is more difficult to achieve.
It is not clear to what extent, if at all, current ‘self-sponsored’ Skilled Worker visa holders will have any investment averaged and deducted from their salary, or whether it is all investment that is to be deducted automatically, or only where there is not evidence of salary being paid for other sources. There will likely have to be further clarification of paragraph (c) in this regard.
Using the double negative ‘not be deducted where the payment is not related to business costs, immigration costs or investment’ in subparagraph (c) has not achieved particular clarity in drafting.
It is also not clear why Skilled Workers cannot invest in their sponsor by purchasing shares or via a Director’s Loan agreement, etc. without risking complications in relation to the salaries on their CoS. There are (currently) no share holding restrictions, and under the old Tier 2 (General) Rules, shareholding was permitted, albeit requiring a higher salary threshold above a certain level of shares.
While it is positive that the Home Office is now updating the Rules for Skilled Workers, rather than simply refusing self-sponsor licences on unclear grounds as has been the case since summer 2024, the lack of specificity in relation to ‘investment’ and whether this clause has any effect on existing visas is unhelpful to sponsors looking to understand the Rules.
3. The UK’s Shifting Stance on Business Migration and Investment
In short, the UK is seemingly opposed to receiving international investment in UK businesses.
Having closed the Tier 1 (Investor) route without replacement, having removed the £50,000 minimum investment funds requirement from “Innovator” as it became Innovator Founder, and now counting investment in sponsoring companies by Skilled Worker visa holders against them, the UK is indeed a hostile environment to business persons and those with significant means.
There are other sponsor licence routes that some businesses may be able to consider and which do not require funds from the founder, such as the Expansion Worker route if they have operated for more than three years overseas, Senior or Specialist, etc., but if there is no route for ‘entrepreneurs’ to move to the UK, then there is potentially a very big gap in the Rules.
4. Contact Our Immigration Barristers
For expert advice in relation to the Skilled Worker Visa route, sponsor licensing or sponsor compliance, contact our business immigration barristers on 0203 617 9173 or complete our enquiry form below.
