The obtaining of a sponsor licence is a significant step any UK business takes to make skilled workers available from outside the UK. However, the financial implications of an application for a sponsor licence in the UK are often left unspoken. Employers must pay a wide range of costs, including the usual licence fee, priority processing charges, and hidden expenses related to compliance. Knowing the full breakdown of sponsor licence costs makes businesses better prepared for any financial surprises that might occur in the process.
The Basics of Sponsor Licence Cost
The fee to acquire a sponsor licence is determined by the size of your business and the nature of the licence required. The fees have been tiered into three different levels since 2024: one for small organisations, one for charities, and one for large organisations. On top of the initial application fee for the sponsor licence, other charges are applied for certificates of sponsorship and any other related expenses. Once the business has acquired the licence, compliance costs will be required.
Standard Sponsor Licence Application Fees
The sponsor licence application fee will most likely be the initial and most significant cost for a business. The cost varies depending on the size of your business:
- Small or Charitable Sponsors: £536
- Medium or Large Sponsors: £1,476
A small business is one that demonstrates at least two of the following:
- Annual turnover: £10.2 million or less.
- Total assets: £5.1 million or less.
- 50 or fewer employees.
Small- and medium-sized businesses do get charged a higher fee but have to reflect the administrative burden of sponsoring workers on the scale.
Priority Services and Their Costs
The Home Office allows priority services to speed up the process of applying for the sponsor licence. Though these are not obligatory, they are in high demand, with businesses looking to access international talent without delay.
Priority Service: For an extra £500, employers can receive a decision on their sponsor licence application within ten working days rather than the standard 8-12 weeks.
Super Priority Service: This costs £800 and promises a decision one working day later. However, availability is limited, and decisions are made on a first-come, first-served basis.
This is a great option for businesses that require urgent hiring but will increase the overall sponsor licence cost.
Certificate of Sponsorship (CoS) Fees
Once the licence is approved, the businesses have to issue a Certificate of Sponsorship for every sponsored worker. This, again, carries additional fees:
- Skilled Worker CoS: £199 per certificate.
- Temporary Worker CoS: £21 per certificate.
The employers have to pay for each certificate according to the number of employees that they wish to sponsor. A lack of budget for the same can hamper the recruitment process.
The Immigration Skills Charge
The Immigration Skills Charge is a compulsory charge levied on sponsoring employers of skilled workers. It is intended to encourage investment in the domestic UK workforce while supporting training and education systems in the country. The charge varies based on business size:
- Small or Charitable Sponsors: £364 for the first year and £182 for subsequent six-month periods.
- Medium or Large Sponsors: £1,000 for the first year and £500 for each additional six months.
This charge is levied per sponsored worker and has to be paid upfront upon the allocation of a Certificate of Sponsorship. Businesses that sponsor multiple workers may see their total sponsor licence cost multiplied by the Immigration Skills Charge.
Hidden Costs of Sponsorship
Although the above fees are transparent and foreseen, there are several costs that employers might fail to notice when applying for a sponsor licence. Some of these include:
Legal Advice and Representation
Most companies hire professional legal advice to ensure their sponsor licence application is accurate and meets the requirements of the Home Office. Legal fees can be between £1,000 and £5,000, depending on the case’s complexity. Although this is an optional expense, it will save companies from costly mistakes and delays.
Compliance and Audits
A sponsor licence is maintained on rather strict compliance standards set by the Home Office. It maintains record-keeping, monitors employees’ immigration status, and reports a change in circumstances. Businesses may need to invest in:
- HR systems for efficient compliance.
- External audits are needed to determine vulnerabilities and compliance issues.
The costs of these services vary but are crucial for avoiding penalties or licence revocation.
Renewal Fees
Sponsor licences are valid for four years and require renewal to continue sponsoring employees. Renewal fees are similar to the application fees of first-time applicants. It is either £536 for a small sponsor or £1,476 for a medium or large sponsor. Budgeting for such recurrent costs is very essential in long-term planning.
This video will tell you every essential detail about the sponsor licence.
The Cost of Sponsorship Revealed
The true cost of sponsorship cannot be determined merely through the identification of direct charges but rather by the acknowledgement of indirect ones. For a medium-sized business sponsoring five skilled workers for three years, costs would include:
- Licence application fee: £1,476
- Immigration Skills Charge: £15,000 or £1,000 a year per worker
- Certificates of Sponsorship: £995 or £199 for a worker
- Legal support and compliance: Approximately £2,500
In this case, the cumulative cost is more than £19,000. Knowing this kind of cumulative cost, a business can prepare to avoid financial strain.
Managing Sponsor Licence Costs
While the price of a sponsor licence might be intimidating, you can run a business in a way that minimises expenses by getting things right in advance. Here are some tips:
Plan Recruitment Strategies: Calculate the amount of funds needed for the sponsorship of workers, then determine the number to be sponsored.
Use Standard Processing Where Possible: Unless absolutely necessary to cost more for priority services, avoid.
Invest in Compliance: The earlier compliance is achieved, the lesser the risk of penalties and the cost of correcting them.
Seek Professional Advice: It makes sense to work with experienced immigration solicitors to avoid the most costly mistakes and help streamline the application process.
Sponsorship Success Plan Ahead
It is an investment in your business’s future, as well as obtaining and maintaining the sponsor licence. To ensure you can afford to sponsor skilled workers, you need to understand the full breakdown of sponsor licence costs, including costs for standard applications and hidden other compliance costs. The planning phase and the need to seek expert help brings us to the critical stage of finding a way to avoid making costly mistakes and having a long run unless you do it the right way. A Y & J Solicitors are here if you need assistance in managing your sponsor licence cost and navigating an application.A Y & J Solicitors is a specialist immigration law firm with extensive experience with sponsor licence applications. We have an in-depth understanding of immigration law and are professional and results-focused. For assistance with your visa application or any other UK immigration law concerns.
