The cost of sponsoring overseas talent in the UK continues to rise. For a five-year Skilled Worker entry clearance application, the typical outlay for a single applicant is already around £12,000. Add dependants, priority processing, English language testing, tuberculosis screening and criminal records certificates and the budget can escalate quickly.
At the same time, the Immigration Skills Charge (ISC), already the single largest element of the sponsorship costs, is expected to rise by a further 32% later this year or in early 2026. Hiring budgets are set to increase significantly.
Yet as costs climb, the Home Office is narrowing the scope for employers to recover immigration expenses from workers. While policy guidance has long made clear that certain immigration-related fees cannot be passed on to employees, the Home Office has recently expanded this list. And from 9 April 2025, a new rule also excludes certain salary deductions from being counted towards the Skilled Worker minimum salary threshold.
The direction of travel is clear: employers must be prepared to absorb more of the cost burden and take particular care when drafting any cost-sharing arrangements to avoid severe legal and reputational consequences.
Closer Look
From 1 January 2025, the sponsor guidance confirms that employers must not pass on the cost of a Certificate of Sponsorship (CoS) or any sponsor licence fees (including updates such as adding a branch to an existing licence) to sponsored workers. This is in addition to the long-standing ban on recovering the ISC.
The rule applies to:
- CoS assigned on or after 31 December 2024; and
- Sponsor licence fees where recovery is attempted on or after 31 December 2024.
While the Home Office had previously discouraged passing these costs to workers, the practice was not explicitly prohibited. It is now unlawful, and any sponsor attempting to recover such costs risks revocation of their sponsor licence.
Costs That Can And Cannot Be Recovered
| Cannot be Reclaimed | Typical Amount | May be Reclaimed (but reduce salary for MSL) | Typical Amount |
| Certificate of Sponsorship fee (for CoS assigned on/after 31 Dec 2024) | £525 (per Certificate of Sponsorship) | Legal fees for visa applications (if worker had a genuine choice, and proportionate) | Variable |
| Immigration Skills Charge (ISC) | £364–£1,000 per worker per year | Immigration Health Surcharge (IHS) | £1,035 per year per person |
| Sponsor licence application fee | £574 (small/charity) £1,579 (medium/large) | ECCTIS (degree verification) | ~£210 |
| Priority sponsor licence service | £500 | Visa priority processing fee | £500 – £1,000 |
| Legal fees linked to sponsor licence application, maintenance, or CoS assignment | Variable | Home Office visa processing fees | £769 (3-year) / £1,751 (5-year) |
| Life in the UK test fee | £50
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| Medical test fees (e.g., TB test overseas) | Variable |
New Rule on Calculating Salary
From 9 April 2025, the Home Office requires sponsors to deduct from the qualifying salary any payments made by the worker to the sponsor (or a related entity) that relate to business costs, immigration costs or investment. These deductions will be averaged over the full sponsorship period.
The types of payments affected include:
- Salary deductions,
- Loan repayments, and
- Investments.
This policy shift is designed to bring consistency with how allowances are treated, to ensure immigration costs are not passed back to workers, and to close a loophole that previously allowed self-sponsored founders to appear to ‘fund’ their own qualifying salary through investment in their business.
Clawbacks Under Scrutiny
Many sponsors use clawback clauses to protect their investment. These provisions are not inherently unlawful and, for immigration sponsorship purposes, are not treated as salary deductions. However, the risk profile is increasing, and it is essential that any clawback is reasonable, proportionate, and not designed to restrict a worker’s ability to leave employment.
When drafting or enforcing clawbacks, sponsors should also take account of additional risks, including:
- Potential indirect discrimination;
- The possibility of being classified as a penalty clause;
- Interactions with National Minimum Wage rules; and
- Home Office compliance concerns.
What Employers Should Do Now
- Budget realistically for rising sponsorship costs and reduced ability to recover expenses.
- Undertake visa eligibility pre-assessments to avoid unnecessary spending.
- Review contracts and clawback provisions to ensure they are compliant, proportionate, and audit-ready.
- Identify higher-risk employee populations (e.g. new entrants, health and education roles, transitional salaries) where compliance margins are tighter.
- Assess optional services (priority processing, legal support, etc.) to ensure value for money.
Conclusion
As sponsorship costs increase and cost-sharing is being curtailed, employers need a more conservative financial model and robust compliance controls. With the Home Office tightening its approach, immigration can no longer be managed in silos.
At Brecher, our Employment and Immigration teams work together to provide integrated advice on workforce planning, sponsorship compliance and risk management ensuring your business is protected while attracting and retaining the talent it needs.
This update is for general purpose and guidance only and does not constitute legal advice. Specific legal advice should be taken before acting on any of the topics covered. No part of this update may be used, reproduced, stored or transmitted in any form, or by any means without the prior permission of Brecher LLP.
