UK Sponsor Licence Fees: Small vs. Large Company Costs Breakdown

Introduction

For finance teams and HR directors, understanding the costs associated with obtaining and maintaining a UK Sponsor Licence is critical for budgeting and strategic workforce planning. The UK Sponsor Licence, required to hire non-UK nationals under visa routes like the Skilled Worker Visa, involves various fees that differ based on company size. With fee increases effective from 9 April 2025, this guide provides a detailed breakdown of costs for small and large companies, alongside compliance considerations, to support informed financial decisions in 2025.

Defining Small vs. Large Companies

The Home Office classifies companies as ‘small’ or ‘large’ based on criteria outlined in the Companies Act 2006, updated on 6 April 2025. A company qualifies as a small sponsor if it meets at least two of the following:

• Annual Turnover: £15 million or less (previously £10.2 million).
• Balance Sheet Total: £7.5 million or less (previously £5.1 million).
• Employees: 50 or fewer.

Registered charities in England, Wales, Scotland, or Northern Ireland also qualify as small sponsors. Companies not meeting these criteria, or those classified as public companies, insurance companies, banking companies, or e-money issuers, are considered medium or large sponsors. This classification directly impacts Sponsor Licence fees and related costs.

Finance Action: Confirm your company’s size classification using financial records and Companies House data to ensure accurate fee budgeting.

Sponsor Licence Application Fees

The initial application fee for a Sponsor Licence varies by company size and licence type (Worker or Temporary Worker). As of 9 April 2025, the fees are:

• Small or Charitable Sponsors:
  
  • Worker Licence (e.g., Skilled Worker, Senior/Specialist Worker): £574
  • Temporary Worker Licence (e.g., Seasonal Worker): £574
• Medium or Large Sponsors:
  
  • Worker Licence: £1,579
  • Temporary Worker Licence: £574
  • Adding a Worker Licence to an existing Temporary Worker Licence: £1,005

Note: These fees represent a 7% increase from pre-April 2025 rates (£536 for small sponsors, £1,476 for large sponsors). From 31 December 2024, employers cannot recover these costs from workers, increasing the financial burden on the company.

Finance Action: Budget for the appropriate application fee based on company size. For small companies newly classified under the 2025 criteria, verify eligibility to benefit from the lower £574 fee.

Certificate of Sponsorship (CoS) Fees

Each sponsored worker requires a CoS, with costs varying by visa category and significantly increased in 2025:

• Worker Visa (e.g., Skilled Worker, except Sportsperson): £525 per CoS (up from £239, a 120% increase).
• Temporary Worker Visa: £55 per CoS.
• International Sportsperson (over 12 months): £525 per CoS.
• International Sportsperson (12 months or less): £55 per CoS.

Note: The CoS fee is payable for each worker sponsored, and multiple CoS may be needed for visa extensions or role changes.

HR Action: Forecast CoS costs based on anticipated hiring needs. For example, sponsoring 10 skilled workers in 2025 would cost £5,250 in CoS fees alone for either small or large companies.

Immigration Skills Charge (ISC)

The ISC is a mandatory levy paid by employers when assigning a CoS for Skilled Worker or Senior/Specialist Worker visas. The fee depends on company size and visa duration:

• Small Sponsors:
  
  • £364 for the first 12 months.
  • £182 for each additional 6-month period.
• Large Sponsors:
  
  • £1,000 for the first 12 months.
  • £500 for each additional 6-month period.

Example:

• A 3-year Skilled Worker Visa for a small sponsor: £364 + (4 × £182) = £1,092.
• A 3-year Skilled Worker Visa for a large sponsor: £1,000 + (4 × £500) = £3,000.

Note: The ISC cannot be recovered from workers, and exemptions apply for certain roles (e.g., PhD-level occupations or Graduate Visa transitions).

Finance Action: Calculate ISC costs based on visa duration and number of sponsored workers. Small companies benefit significantly from lower ISC rates, especially for long-term hires.

Additional Compliance Costs

Beyond mandatory fees, companies incur operational costs to maintain Sponsor Licence compliance, which can exceed initial expectations:

• Compliance Infrastructure: Investment in HR systems, training, and record-keeping to meet Home Office requirements (e.g., monitoring employee attendance, maintaining right-to-work records).
• Legal and Consultancy Fees: Engaging immigration advisors for complex applications or audits, typically £2,000–£5,000 depending on case complexity.
• Audit Preparation: Staff time and resources to prepare for Home Office compliance visits, which may occur pre- or post-licence approval.
• Reporting Obligations: Costs associated with updating the Sponsor Management System (SMS) within 20 working days for changes like company size, address, or key personnel.

HR Action: Allocate budget for compliance systems and training. Ensure HR directors coordinate with finance teams to account for these ongoing expenses.

Total Cost Examples

Small Sponsor (e.g., tech startup with 30 employees)

• Scenario: Applying for a Worker Licence and sponsoring 5 skilled workers for 3-year visas.
• See the cost comparison below

Large Sponsor (e.g., multinational corporation)

• Scenario: Applying for a Worker Licence and sponsoring 5 skilled workers for 3-year visas.‍
• See the cost comparison below
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Cost Comparison Small vs Large Sponsor
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Finance Action: Use these examples to model costs based on hiring plans. Factor in potential compliance costs, which may add 20–30% to the total.

Expedited Processing Costs

For urgent needs, a priority processing service (10 working days) is available for an additional £500. This is particularly relevant for large sponsors facing higher baseline costs, where faster approval can align with project timelines.

HR Action: Evaluate the priority service for time-sensitive hires, ensuring all documents are complete to maximize approval chances.

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Compliance Considerations for 2025

• Increased Enforcement: The Home Office has intensified audits in 2025, with non-compliance leading to licence suspension or revocation. Costs of penalties or legal support for reinstatement can be substantial.
• Company Size Reporting: If a company’s size changes (e.g., from large to small due to 2025 criteria), report via the SMS within 20 working days to benefit from lower fees.
• Non-Recoverable Costs: From 31 December 2024, employers cannot pass any compliance-related costs to workers, increasing financial responsibility.

Finance Action: Reserve a contingency budget for potential penalties or legal fees. Monitor company size annually to leverage lower fees if eligible.

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Best practices for Finance & HR for Sponsor Licence Fees:

• Plan budgets early – Cover licence, CoS, ISC, and compliance costs, plus possible fee hikes.
• Check company size – Use 2025 rules to confirm if you qualify as a small sponsor (can save big).
• Simplify compliance – Use HR tools to track CoS, ISC, and SMS updates.
• Be audit-ready – Invest in training and mock audits.
• Get advice when needed – Use immigration experts for tricky cases.
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Case Study: Cost Optimization

A mid-sized retailer, reclassified as a small sponsor in 2025, saved £5,110 by:

• Applying for a Worker Licence at £574 (vs. £1,579).
• Paying £1,092 per 3-year visa ISC for 3 workers (£3,276 total) instead of £3,000 each (£9,000 total).
• Using HR software to streamline CoS issuance and compliance, avoiding audit penalties.

Disclaimer‍

Immigration laws and policies change frequently and may vary by country or nationality. While we strive to provide accurate and up-to-date information, we recommend doing your own due diligence or consulting official sources. You are also welcome to contact us directly for the latest guidance. Jobbatical is not responsible for decisions made based on the information provided.