Sponsoring Overseas Staff in the UK: Licence Types, Costs and Compliance Explained Clearly

If you want to employ overseas staff in the UK, you need the right sponsor licence and a clear understanding of the costs and rules. There are different types of sponsor licences depending on your business size and the type of workers you want to hire, with fees ranging from £574 to £1,579 for the licence itself. 

You also need to manage ongoing charges like the Immigration Skills Charge and ensure you meet strict compliance requirements.

Sponsoring workers means you are responsible for keeping records, reporting certain changes, and avoiding penalties that can reach up to £60,000. Knowing which licence type fits your business and the costs involved can help you avoid delays and legal risks. This guide will break down the key points to help you make informed decisions about sponsoring overseas employees in the UK.

Sponsor Licence Types in the UK

To sponsor overseas staff, you need to understand which licence applies to your organisation and the type of worker. Licences vary based on the worker’s role and the length of employment. Each licence type has specific rules and costs.

Worker Licence: Skilled Worker and Specialist Categories

The Worker licence lets you hire skilled workers under the Skilled Worker route. This includes roles that require particular skills and qualifications. You can sponsor long-term or permanent employees in sectors like IT, engineering, healthcare, and more.

It also covers specialist workers such as:

• Senior specialist workers

• Ministers of religion

• Religious workers

You must prove that the job meets salary and skill thresholds. This licence is suitable for companies with ongoing skilled vacancies. You will need to pay application fees and comply with sponsor duties, such as record-keeping and reporting changes in employee status.

Temporary Worker Licence: Creative, Charity, and Government Authorised Exchange

This licence covers short-term or temporary employment under Tier 5 categories. You can sponsor workers like:

• Creative and sporting workers

• Charity workers

• Government Authorised Exchange participants

• Youth Mobility Scheme participants

It is designed for seasonal jobs, internships, or cultural exchanges. Sponsorship under this licence is time-limited, and roles do not usually require long-term commitments.

You must meet Home Office rules for each category and handle certificates of sponsorship carefully. The fee structure differs slightly from the Worker licence.

Student and Educational Sponsor Licences

If your organisation recruits students or educational staff from overseas, you need one of these licences. They cover Tier 4 (Student) visa sponsors, making you responsible for:

• Enrolling genuine students

• Supporting student visa applications

• Reporting attendance and changes in course status

Educational institutions and training providers must apply for this licence to sponsor international students. It ensures you comply with immigration rules and help students maintain their legal status in the UK.

Routes for Sole Traders, Limited Companies and Expansion Workers

Whether you are a sole trader or run a limited company, you can apply for a sponsor licence. Your business size affects the licence fee and Immigration Skills Charge you pay when sponsoring staff.

Expansion workers are migrants who need to transfer to UK branches of a company based overseas. You must hold a Worker licence to sponsor these employees.

Make sure your organisation registration and business type match the licence conditions. Different rules may apply depending on whether you are a small sponsor or a larger organisation.

Employer Sponsorship Process and Application

You need to understand what makes your business eligible to apply for a sponsor licence and prepare the right documents. Then, you must assign specific roles to manage your licence using the Sponsor Management System (SMS). Finally, the application involves submitting forms and undergoing an initial compliance check by the Home Office.

Eligibility and Documentation Requirements

Your business must be officially registered in the UK, often proven by Companies House registration documents. You need to show you operate legally and follow UK business laws. The Home Office requires proof of your organisation's size and status to set the correct application fee.

Essential documents include recent business accounts, proof of registration, and evidence of operations, such as address verification. If you are a charitable or small organisation, fees differ, so include documents confirming your status.

You must also confirm that the roles you want to sponsor meet Home Office job suitability rules. This means the job must qualify under the Skilled Worker route, meeting specific skill and salary thresholds.

Sponsor Management Roles: Authorising Officer, Key Contact and Users

You must appoint three main roles to manage your sponsor licence:

• Authorising Officer: Usually a senior person in your company. They confirm the application’s accuracy and legal compliance.

• Key Contact: The primary person who communicates with the Home Office about the licence. Often an HR manager.

• Level 1 and 2 Users: These staff members use the Sponsor Management System (SMS) to assign certificates and add or remove sponsored workers. Level 1 users control access and manage licence tasks, while Level 2 users perform day-to-day sponsorship operations.

Each role has specific responsibilities to keep your licence in good standing. Proper assignment helps avoid compliance breaches.

Application Steps and Initial Compliance Assessment

You apply online through the Home Office website using the sponsor licence application form. You select the licence type based on your organisation’s size and business activities. The fees range from £574 for small charities to £1,579 for large businesses.

Once submitted, the Home Office carries out an initial compliance check. This includes reviewing your documents and, usually, a site inspection to make sure your business is genuine.

The compliance check looks for valid premises, proper record-keeping, and secure processes to assign Certificates of Sponsorship through the SMS. Failed checks can delay or refuse your licence.

After approval, you can begin sponsoring workers using the SMS system. You must keep records up to date to avoid penalties.

Sponsorship Costs, Fees and Charges

When sponsoring overseas staff in the UK, you will face several fees. These include charges for your sponsor licence, certificates to hire workers, immigration skills costs, visa fees, and the health surcharge. Knowing these costs helps you budget and meet legal requirements on time.

Licence and Certificate of Sponsorship Fees

To begin sponsoring workers, you must apply for a sponsor licence. The cost depends on your organisation’s size.

Sponsor Type	Licence Fee
Small or Charitable	£574
Medium or Large	£1,579

The licence allows you to issue Certificates of Sponsorship (CoS) for each worker you hire. Each certificate costs £525 for skilled workers. Temporary or other worker types may have lower CoS fees.

You must keep your licence valid and follow compliance rules to avoid losing the ability to sponsor overseas staff. Legal fees linked to preparing your application and ensuring compliance can add to your expenses.

Immigration Skills Charge and Exemptions

You must pay the Immigration Skills Charge (ISC) when hiring workers on certain visas. The charge supports training UK workers and varies with your company size:

• Small or charitable sponsors pay £364 per year per worker.

• Medium or large sponsors pay £1,000 per year per worker.

This charge is due for each year of the worker’s visa length, up to a maximum of 5 years.

You may be exempt from paying the ISC if the worker is a new-entrant, on a shortage occupation list, or transferring within a group. Knowing exemption rules can reduce your costs.

Visa Fees, Immigration Health Surcharge and Associated Costs

Workers need a visa to work in the UK. Visa fees vary by the type and length of visa but typically range from £885 to £1,751.

You must also pay the Immigration Health Surcharge (IHS) to allow workers access to the NHS. This fee is charged per year of the visa and can add several thousand pounds for long-term visas.

Additional costs may include legal fees to help with visa applications or extra certificates for different visa types. Budget for these costs when planning to employ overseas staff.

Compliance and Sponsor Duties

You must meet strict rules when sponsoring overseas staff. This includes checking workers’ right to work, keeping clear records, and reporting changes quickly. You also need to make sure roles are genuine and use the correct occupation codes.

Right to Work Checks and Record-Keeping

You have to check each sponsored worker’s right to work before they start. This means examining their documents, such as passports or biometric residence permits. You must keep copies of these documents securely for at least two years after their employment ends.

Your HR systems should record the dates and results of checks. This helps prove you followed the rules if UK Visas and Immigration (UKVI) audits you. Failure to keep accurate records or check rights properly can lead to losing your sponsor licence.

Reporting Duties, SMS Use and Audit Readiness

You must report certain events quickly through the Sponsorship Management System (SMS). This includes changes in job role, salary, or if the worker leaves. You should also report if the worker does not show up or breaches visa terms.

Use the SMS regularly to update information and monitor your sponsored workers. Keeping detailed records and responding promptly helps you stay audit-ready. UKVI may audit your sponsorship anytime. Being prepared with clear evidence reduces your licence risk.

The Genuineness Requirement and Occupation Codes

You must prove that every sponsored job is genuine and meets UKVI standards. Jobs should be real roles within your organisation and meet skill and salary requirements.

Use the correct occupation codes based on the Standard Occupational Classification. These codes affect salary thresholds and visa categories. Getting this wrong can cause refusals or licence penalties. Ensure you understand these codes when assigning roles to sponsored staff.

Impact of Non-Compliance and Enforcement

Failing to meet sponsor licence rules can cause serious problems for your business and the workers you sponsor. You face risks to your licence, financial penalties, and harm to your workers' immigration status.

Licence Downgrading, Suspension and Revocation

If you break sponsor licence rules, your licence can be downgraded, suspended, or fully revoked. This means you could lose the ability to sponsor new foreign workers or keep current sponsored workers legally employed.

A suspension blocks sponsorship until you fix issues, but revocation removes your licence completely. You might face a ban of at least two years from sponsoring after serious breaches.

The Home Office carries out stricter audits in 2025 to check compliance. You must keep accurate records and report changes about sponsored workers on time to avoid triggering these actions.

Civil Penalties and Consequences for Businesses and Workers

Non-compliance can lead to civil penalties up to £20,000 per sponsored worker. These fines increase business costs and damage your reputation.

You must not pass sponsorship fees, including Certificate of Sponsorship charges or Immigration Skills Charge, onto your sponsored workers. Passing costs to workers is against Home Office rules and risks penalties.

When your licence is affected, sponsored workers may lose their leave to remain or face immigration status problems. This can disrupt their stay and employment in the UK.

Failing to follow rules harms both your business and the migrant workers you rely on. Taking compliance seriously protects your workforce and financial interests.

Recent Updates and Changes to Sponsorship Rules

You must follow new rules around sponsorship costs and salary requirements when hiring overseas staff. These changes affect what you can charge workers and the minimum pay needed for Skilled Worker visas. Fee increases also impact your sponsorship expenses.

Restrictions on Recouping Sponsorship Costs

From the end of 2024, you are no longer allowed to pass on certain sponsorship costs to your overseas workers. This includes fees for the sponsor licence and the Certificate of Sponsorship (CoS). The UK government introduced this rule to protect workers from unexpected charges related to their visa applications.

You can no longer charge your sponsored staff fees connected to visa sponsorship processes. This limits your ability to recoup costs from workers, so plan your budget accordingly. Make sure you stay compliant to avoid penalties or licence revocation.

Changes to Minimum Salary Thresholds and Fee Increases

Starting July 2025, the minimum salary threshold for Skilled Worker visas is raised to £41,700 per year. This means you must pay your overseas employees at least this amount for most eligible roles. The change aims to ensure that sponsored workers receive appropriate pay.

Visa and sponsorship fees have also increased as of April 2025. You should review updated fee tables and factor higher costs into your hiring plans. Staying informed on salary and fee changes helps you avoid application refusals and maintain your sponsor licence.

At Athi Law, we specialise in tailored legal solutions. Whether you need a skilled worker visa solicitor, guidance on immigration for students or immigration for investors, our experts are here to help. Our trusted commercial lease solicitors and independent legal advice solicitors ensure your business and personal matters are in safe hands. Contact us today for professional legal advice!