Companies falling within the scope of the UK's small companies regime are eligible to pay reduced sponsorship fees. Around 14,000 more companies can benefit from this due to recent amendments to the turnover and balance sheet thresholds for being a small company. It's your obligation as a sponsor licence holder to report a change of company size to the Home Office, so check and report as soon as possible.
The turnover and balance sheet thresholds for being a small company changed on 6 April 2025, to take into account inflation since these were originally set in 2013.
Why is this important for work route sponsors?
Lower sponsor licence application fees
A company within the small companies regime that applies for a work route sponsor licence can save on the one-off licence application fee. The fee for a medium or large company is currently £1,579. The fee for a small company is £574.
Lower Immigration Skills Charge (ISC)
A medium or large company sponsoring a worker under the Skilled Worker or Senior or Specialist Worker routes will pay an Immigration Skills Charge (ISC) of £1,000 per year per worker (unless limited exceptions apply). The fee for a company within the small companies regime is much lower, at £364 per year per worker.
The ISC hasn't increased since it was introduced in 2017, but under reforms announced in the recent immigration White Paper, it is set to rise by 32%. This means that the ISC for a five-year Skilled Worker visa will be £6,600 instead of £5,000. If a sponsor is an eligible small company, they will pay £2,400 instead, saving £4,200.
What is the new definition of a small company?
The scope of the small companies regime is set out in sections 381 to 384 of the Companies Act 2006.
Under the revised section 383(4), a company will be considered small if, for two full consecutive financial years, any two of the following three criteria are met:
|
Previous threshold |
New threshold from 6 April 2025 |
|
|---|---|---|
| Turnover not more than: |
£10.2 million |
£15 million |
| Balance sheet total not more than: |
£5.1 million |
£7.5 million |
| Monthly average number of employees, not more than: |
50 |
50 (unchanged) |
Be aware that not all organisations are eligible under the small companies regime, even if they meet the definition of a small company. Examples of such companies include:
- A public company
- An authorised insurance company or a company that carries on insurance market activity
- A banking company
- An e-money issuer
- A member of an illegible group – e.g. its members are a trade company
This list is not exhaustive.
What actions should sponsors take in response to this change?
- Review and check if you meet the revised 'small company' definition: Remember you must meet two of the three criteria for two full consecutive financial years. Make sure you're not an ineligible company.
- Consider your track record of compliance and if needed, seek advice: A report to the Home Office can sometimes trigger a review of your compliance history, and it can lead to a Home Office audit (which can take place with or without notice). Before you submit a report, consider your overall compliance with your sponsor duties and if needed, seek legal advice first.
- Report a company size change: If your company is now within the scope of the small companies regime, submit a report to the Home Office through the Sponsor Management System (SMS).
Existing sponsors that have changed size should submit a report through the Sponsor Management System (SMS) to the Home Office no later than 20 working days after becoming aware of the change. Upon approval by the Home Office, the sponsor will be eligible to pay lower ISC fees when assigning a Certificate of Sponsorship.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
