Home » Sponsor Licence Costs: Everything you Need to Know

Sponsor Licence Costs: Everything you Need to Know

December 15, 2021,
Michelle Lee,
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sponsor-licence-costs

If you’re thinking about sponsoring a worker from overseas, one of the first things you’ll want to know is: how much is a sponsor licence going to cost me?

Read on below for everything you need to know about the costs of sponsorship.

If you’d like detailed and accessible information about all aspects of sponsor licences, see our free legal guide – we believe it’s the most comprehensive guide out there.

And as always, you can talk to us about this or any other immigration matter: please just get in touch.

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Sponsor licence costs: who pays for what?

Before we get into it, the first thing to know is that some fees fall to the employer by default, and other fees fall to the worker by default.

You are generally free to depart from that default position, and decide for yourselves how the fees are to be split between you and your worker.  The one exception to this is the Immigration Skills Charge, which cannot be passed to the worker and must be borne by the sponsoring employer.

In my experience, it’s pretty rare for employers to pass their fees to sponsored worker(s).  It’s more common for everyone to bear their own fees, or for employers to pick up the bill for a worker’s fees.

Below is an overview of the default position.  Reductions and exemptions apply in certain circumstances – see the section further down for more info on these.

Home Office fees for the employer

Sponsor licence fee – £536 or £1,476

The lower fee applies to small businesses, the higher fee applies to medium/large businesses.  You’ll pay this when you apply for the licence.

Certificate of Sponsorship (CoS) fee – £199

You’ll pay £199 for your CoS, whether it’s defined or undefined, and no matter how long it lasts.  You’ll pay this when you assign the CoS.

Immigration Skills Charge (ISC) – £364 or £1,000 for each year of sponsorship, payable as an upfront fee

This is the scary one.  Again, the lower fee is payable by small businesses and the higher fee by medium/large businesses.  It’s payable when you assign the CoS.

Although the ISC is a ‘per-year’ fee, you pay the whole amount upfront.  So if you sponsor for two years it’s £728.  If you sponsor for five years, it’s an eye-watering £1,820.

If you’re not sure how long to sponsor for, our blog article on the subject might help with your decision: see How Long Should I Sponsor my Skilled Worker for?

Home Office fees for the worker

Skilled Worker visa fee – various

How much a worker pays for their visa depends on two things: firstly, whether they are inside or outside the UK when they apply for their visa, and secondly, the duration of the visa.

Here are the numbers:

Outside the UK, three years or less                           £610

Outside the UK, more than three years                  £1,220

Inside the UK, three years or less                               £704

Inside the UK, more than three years                      £1,408

Immigration Health Surcharge (IHS) – £624 for each year of sponsorship, payable as an upfront fee

Another scary one.  Like the ISC, the IHS is a ‘per-year’ fee paid in full upfront.  So for two years it’s £1,248, and for five years it’s £3,120.  Whew.

Examples

ABC Ltd is a small business looking to hire Anna from Romania.  ABC Ltd intends to sponsor Anna for three years.

By default, ABC Ltd pays £536 for the licence, £199 for the CoS, and (£364 x 3) for the ISC, for a grand total of £1,827.

Anna pays £610 for her visa and (£624 x 3) for the IHS, for a grand total of £2,482.

ABC Ltd and Anna agree to pay their own fees, as per the default position.

XYZ Limited is a small business looking to hire Zach from South Africa.  XYZ Limited wants to sponsor Zach for five years.

By default, XYZ Limited pays £536 for the licence, £199 for the CoS, and (£364 x 5) for the ISC, for a grand total of £2,555.

Zach pays £1,220 for his visa and (£624 x 5) for the IHS, for a grand total of £4,340.

XYZ Limited agrees with Zach that the company will pay Zach’s IHS, and Zach will pay for his own visa.

Fee Reductions and Exemptions

You and your worker can benefit from various reductions and exemptions.  The most common of these are:

Shortage Occupations

Where a job is on the Shortage Occupation List, the visa fees are the same inside and outside the UK, and drop to the following rates:

Three years or less                                                           £464

More than three years                                                   £928

Health and Care Workers

Workers in certain health and care professions are eligible for the Health and Care Worker visa, a special type of Skilled Worker visa.

If this applies, the visa fees are the same inside and outside the UK, and drop to the following rates:

Three years or less                                                           £232

More than three years                                                   £464

Applicants for the Health and Care Worker visa are also exempted from the IHS, which can be a significant saving as it’s one of the ‘per-year’ upfront fees.

Student Switchers

Where an individual switches to sponsorship from a student visa, their employer is exempt from paying the ISC.  This can be a decent saving, as the ISC is one of the ‘per-year’ upfront fees.

Examples: Reduced Fees and Exemptions

CareCo Limited is a small care provider looking to hire Mary as a Senior Care Worker.  Mary is a Singaporean national living in China.  CareCo Limited wants to sponsor Mary for two years.

CareCo Limited pays £536 for its sponsor licence, £199 for the CoS, and (£364 x 2) for the ISC, for a grand total of £1,463.

As a Senior Care Worker, Mary is eligible for the Health and Care Worker visa.  She pays £232 for the visa and is exempt from paying the IHS, so the total cost to her is just £232.

EngineerCo Ltd is a small business looking to hire Federico as a Civil Engineer, for a period of five years.  Federico is a Spanish national already in the UK on a student visa.

Civil Engineer appears on the UK’s Shortage Occupation List.

EngineerCo Ltd pays £536 for its sponsor licence and £199 for the CoS.  Because Federico is switching from his student visa, EngineerCo Ltd is exempt from the ISC.  The total cost to the company is therefore £735.

Federico pays the reduced fee of £928 for his visa, and (£624 x 5) for the IHS, for a total of £4,084.

Other costs associated with sponsor licences

These are optional, but worth factoring into your decisions.

Legal Fees

Sponsorship is daunting and mistakes can be expensive.  You can keep stress levels low by taking advice from a specialist immigration solicitor.  Now, I wonder where you might find one of those?!

At Truth Legal, we’re doing sponsor licence applications day-in-day-out, and we’ve written extensively on the subject.  Try us for yourself with a free Immigration consultation, and then we’ll quote competitively for our services.

Priority Service

… is a minefield on its own.  It costs £500 but isn’t guaranteed.  For everything we know about this weird process, see our blog: Priority Service for Sponsor Licence Applications.

Priority service might also be available for your worker’s visa application, but the cost for this depends on availability and where they are in the world.  If available, it usually costs a few hundred extra.

Anything else I should know?

  • If, for whatever reason, your sponsored worker doesn’t stay with you for the full term of their visa, the ISC and IHS will be partially refunded.
  • The fee for a single CoS is £199, no matter its duration. When the CoS expires you need to apply for a new one, which will cost another £199.
  • You’ll have seen from the above that, when it comes to the duration of a visa, the Home Office draws a line at three years. If you sponsor for exactly three years, the lower fees apply.

Sponsor licences: are they worth the costs?

Ultimately, only you know what’s best for your business.

However, I do speak to a lot of employers in your position, and my thoughts are as follows:

  • It’s tough out there in the UK labour market – many employers are thinking that sponsorship, while financially painful in the short-term, will pay off in the long-term.
  • How much are you already spending on recruitment agencies? Do you wish you could spend less on Indeed?  Sponsor licence costs aren’t cheap, but neither are other forms of recruitment, especially if they’re not generating the candidates you need.
  • Brexit has turned off a tap on migration from Europe, and that tap won’t be switched on again any time soon. Whether you think that’s a good or bad thing, a sponsor licence offers a different kind of tap for overseas labour.

We hope you found this guide to sponsor licence costs useful.  If you’re ready to talk sponsorship, please get in touch with us today.

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