Table of Contents
- Introduction to Sponsor Licence Costs
- Sponsor Licence: What is it?
- Detailed Breakdown of Sponsor Licence Costs
- Role of Business Size, the role itself and Worker’s Origin in Sponsor Licence Costs
- How the Size of the Business Affects the Costs
- How the Worker’s Origin Affects the Costs
- Comparison of the Costs for Businesses and Workers from Different Origins
- Fee Reductions and Exemptions: Opportunities for Savings
- Detailed Case Studies: The Real-world Implication of Sponsor Licence Costs
- Other Associated Costs with Sponsor Licences
- The Value Proposition of a Sponsor Licence
- Business Growth and Innovation
- Expert Tips When Considering Sponsor Licence Fees
- Frequenty Asked Questions About Sponsor Licence Fees
Introduction to Sponsor Licence Costs
In the vibrant and dynamic world of international business, the ability to attract, recruit, and retain talent from all over the globe is not just a perk—it’s often a necessity. For UK-based businesses, one of the critical elements in achieving this global reach is understanding and efficiently managing Sponsor Licence fees.
Understanding Sponsor Licence costs can seem a daunting task due to its many elements and variables. However, in this guide, we aim to clear the costs associated to help you make informed decisions when sponsoring overseas talent and budget accordingly.
We will break down costs for different scenarios, showcase real-life case studies, discuss the various exemptions available, and offer expert advice on managing these costs effectively. This guide aims to be the ultimate resource for businesses, large and small, aiming to sponsor overseas talent in the UK.
Whether you are a small start-up looking to hire your first overseas talent or a multinational corporation with years of experience in immigration sponsorship, this guide offers valuable insights. From breaking down costs to providing real-life scenarios, and from discussing exemptions to sharing expert tips, our aim is to equip you with the knowledge you need to make informed decisions regarding Sponsor Licence costs.
Sponsor Licence: What is it?
The global business landscape is an intricate tapestry of talent, with international workers enriching the UK’s workforce across various sectors. To hire these individuals from overseas, the fundamental instrument that UK employers need to possess is a Sponsor Licence.
A Sponsor Licence, colloquially known as Sponsorship Licence, is an official permit granted by the UK Home Office. It authorises UK-based businesses to assign Certificates of Sponsorship (CoS) and sponsor overseas workers to fill genuine roles within their organisations, enabling the workers to apply for a Skilled Worker visa and legally work in the UK.
After Brexit, the need to recruit overseas workers has increased and the Sponsor Licence has become a vital component of UK businesses. Its design fosters a controlled environment where skilled foreign nationals can contribute their expertise to the UK economy. The aim is not just about filling job vacancies. It is about building a strong, diverse workforce that can bolster the UK’s standing in the global market.
This licence is not exclusive to any particular industry. It plays a pivotal role in various sectors, including but not limited to Healthcare, Hospitality, Construction, Telecommunications, IT, and Media. In each of these industries, the Sponsor Licence enables the hiring of indispensable staff from foreign countries.
Acquiring a Sponsor Licence requires a thorough and meticulous application process. Businesses need to provide ample evidence to demonstrate their eligibility and their commitment to their responsibilities as a sponsor. The Home Office scrutinises every application to ensure that only genuine employers with a bona fide need can sponsor overseas workers.
Once granted, maintaining a Sponsor Licence requires stringent adherence to a compliance regime set by the UK Home Office. Regular checks and audits are carried out to ensure that employers are upholding their sponsorship duties and responsibilities.
In essence, a Sponsor Licence is more than just a permit—it’s an investment in the future of an organisation. It opens up avenues to global talent, paving the way for business growth and fostering diversity. By understanding what a Sponsor Licence is and the critical role it plays, UK businesses can better navigate the challenges and opportunities that come with hiring international talent.
In the following sections, we will delve into the cost aspect of acquiring and maintaining a Sponsor Licence, providing an in-depth understanding of how to budget for this crucial business tool.
Detailed Breakdown of Sponsor Licence Costs
When planning to obtain a Sponsor Licence, it’s crucial to consider the various costs associated with the process. The fees can be quite diverse, ranging from the initial licence application fee to additional charges related to the hiring and upkeep of foreign workers. These costs are applicable to all organisations, whether small, medium, or large, and understanding them is a crucial part of managing your company’s budget.
Cost Implications for the Employers
Sponsor Licence Fee
The Sponsor Licence fee is the primary cost incurred by organisations looking to employ overseas workers. The required fee depends on the size and type of the organisation. Currently, the Home Office charges small or charitable organisations £536, while medium or large organisations are required to pay £1,476. Keep in mind that these fees may change, so it’s best to confirm the most up-to-date information on the official government website.
Certificate of Sponsorship (CoS) Fee
The Certificate of Sponsorship, or CoS, is a virtual document containing all the details about the job and the worker a company wishes to hire. Each overseas worker a company sponsors will require a CoS. As an employer, you need to pay a fee of £199 for each CoS you assign.
Immigration Skills Charge (ISC)
The Immigration Skills Charge is an additional cost borne by employers and is designed to incentivise training and upskilling of the local workforce. The payment amount varies according to the size of the company and the employment term stated on the CoS. For small businesses and charities, the initial 12-month period costs £364, and each subsequent 6-month period costs £182. As for medium and large organisations, the first 12 months cost £1,000, and each additional 6-month period costs £500.
Cost Implications for the Workers
Skilled Worker Visa Fee
The Skilled Worker Visa Fee is paid by the prospective employee and varies depending on the length of stay and where the application is made. For applications made outside the UK, the fee for up to three years is £610 and for more than three years it’s £1,220. If the application is made within the UK, the fee is £704 for up to three years and £1,408 for more than three years. There’s also a discount for citizens of certain countries, bringing the cost down to £55 less than the usual rate.
Immigration Health Surcharge (IHS)
The Immigration Health Surcharge, or IHS, is a fee that grants immigrants access to the National Health Service (NHS). The current rate is £624 per year for most visa and immigration applications, though there are certain exceptions and discounts available.
The above are just the primary costs associated with obtaining and maintaining a Sponsor Licence. Additional costs may arise depending on individual circumstances, such as legal advice fees, HR system adjustments, and potential costs associated with non-compliance.
Understanding these costs is paramount to ensure effective budgeting and strategic planning, contributing to the seamless integration of international talent into your organisation.
Role of Business Size, the role itself and Worker’s Origin in Sponsor Licence Costs
When it comes to the costs of a Sponsor Licence, it’s essential to note that the size of the business, the role being performed and the worker’s origin can significantly affect the final figure. These factors can play a significant role in assessing how much the job will cost both the company and the people who might work there.
How the Size of the Business Affects the Costs
The size of your business impacts various fees related to the Sponsor Licence process. For instance, the Sponsor Licence fee itself differs according to whether your organisation is classified as small, medium, or large.
To be categorised as a small business in the UK, your annual turnover must be £10.2 million or less, or your average employee count must be 50 or fewer. Smaller businesses and charities enjoy a reduced fee of £536 to obtain the Sponsor Licence. In contrast, medium or large organisations are required to pay a fee of £1,476.
The Immigration Skills Charge (ISC) also fluctuates depending on your business’s size. For small businesses or charities, the first 12 months of service cost £364, with subsequent 6-month periods priced at £182. For medium or large businesses, the initial fee is £1,000 for the first 12 months, followed by a charge of £500 for every additional 6-month period.
How the Worker’s Origin Affects the Costs
The origin of the worker or applicant plays a role in determining the visa fee. For the Skilled Worker Visa, a £55 discount is applicable for applicants from certain countries, as listed in the Immigration Rules. Hence, the nationality of the worker can lead to a reduced visa fee, thereby indirectly affecting the overall cost to your business, especially if the business decides to bear this expense as part of the relocation package.
Comparison of the Costs for Businesses and Workers from Different Origins
The costs associated with obtaining a Sponsor Licence and employing overseas workers can differ significantly based on the business size and the worker’s origin. A small business employing a worker from a country eligible for the visa fee discount will pay less compared to a large organisation hiring a worker from a non-eligible country.
As an example, a small business hiring a worker from an eligible country for a one year period would face a total cost of £2,278 (Sponsor Licence fee + CoS fee + ISC for 12 months) + visa fee (£555 and £624 IHS). On the other hand, a large business hiring a worker from a non-eligible country for the same period would face a cost of £3909 (Sponsor Licence fee + CoS fee + ISC for 12 months) + visa fee and IHS.
To sum up, it’s crucial for companies to consider the size of their business and their employees’ origin when it comes to the costs of obtaining a Sponsor Licence. By being aware of these variables, businesses can create more effective recruitment plans and allocate their budgets accordingly.
Fee Reductions and Exemptions: Opportunities for Savings
The Sponsor Licence process undoubtedly involves significant costs. However, the UK immigration system also provides several opportunities for fee reductions and exemptions. Understanding these opportunities can help organisations and their potential hires manage these costs more effectively. Let’s explore some of these avenues for potential savings.
Small Business and Charitable Sponsors
The size of an organisation plays a crucial role in determining the cost of obtaining a Sponsor Licence. Smaller businesses and charitable sponsors are charged a reduced rate compared to their larger counterparts. For example, the initial Sponsor Licence fee for small and charitable sponsors is £536, nearly two-thirds less than the £1,476 fee for larger businesses. This reduction can help smaller organisations to access global talent without overly straining their resources.
Immigration Skills Charge (ISC) Reduction and Exemption
Reductions based on business size
The ISC, which large sponsors are required to pay annually for each sponsored worker, is also subject to reductions based on the size of the business. For small or charitable sponsors, the charge is reduced from £1,000 to £364 per year.
Reductions based on the occupation list
Moreover, the ISC is waived altogether for certain types of workers. For instance, workers transitioning from a student visa (once they have completed their studies) to a Skilled Worker visa are exempt from this charge, as are PhD-level occupations and some researchers. There are instances where some roles and occupations attract exemptions from the immigration skills surcharge. The following occupations are exempt:
· Chemical scientists (2111)
· Biological scientists and biochemists (2112)
· Physical scientists (2113)
· Social and humanities scientists (2114)
· Natural and social science professionals not elsewhere classified (2119)
· Research and development managers (2150)
· Higher education teaching professionals (2311)
· Clergy (2444)
· Sports players (3441)
· Sports coaches, instructors or officials (3442)
Healthcare and Social Care Visa
For potential hires in the health and social care sector, the UK government offers a special type of visa. The Healthcare and Social Care Visa have lower application fees, and individuals applying for this visa are exempt from the IHS. This scheme provides significant savings for both workers and organisations in this crucial sector.
Immigration Health Surcharge (IHS) Reimbursement Scheme
In recognition of their valuable contribution during the COVID-19 pandemic, certain health and social care workers are eligible for an IHS reimbursement, meaning they can claim back the cost of the IHS that they’ve paid as part of their visa application.
Understanding these potential fee reductions and exemptions can significantly lower the financial impact of the Sponsor Licence process for both organisations and their overseas workers. Proper planning and careful consideration of these opportunities can help make the process of hiring foreign talent a viable option for businesses of all sizes.
Detailed Case Studies: The Real-world Implication of Sponsor Licence Costs
To provide a better understanding of the costs involved in obtaining a Sponsor Licence and how it affects businesses, let’s consider two hypothetical UK-based firms – XYZ Healthcare Ltd, a small enterprise, and Alpha Tech Corp, a large corporation. Both companies are currently in the process of recruiting a skilled worker from another country to fill a specific role within their organisation.
Case Study 1: XYZ Healthcare Ltd
XYZ Healthcare Ltd is a small healthcare provider based in Manchester. They’ve identified a prospective worker, Fatima, a specialised nurse from the Philippines.
Here’s a breakdown of the costs for XYZ Healthcare Ltd:
Sponsor Licence fee: £536
Certificate of Sponsorship (CoS) fee: £199
Immigration Skills Charge (ISC) for up to three years: £364 (first 12 months) + £364 (next 12 months) + £364 (third 12 months) = £1,092
Now, let’s look at the fees for Fatima:
Skilled Worker Visa fee: £247 (Since she qualified under healthcare visa list)
Immigration Health Surcharge (IHS) for three years: £0 (as she qualifies for an IHS exemption under the health care visa)
Total cost for XYZ Healthcare Ltd is £1,827 and for Fatima is £610
Case Study 2: Alpha Tech Corp
Alpha Tech Corp is a large technology firm in London looking to hire Raj, a Financial Manager from India. Here’s a breakdown of the costs for Alpha Tech Corp:
Sponsor Licence fee: £1,476
Certificate of Sponsorship (CoS) fee: £199
Immigration Skills Charge (ISC) for three years: £1,000 (first 12 months) + £1,000 (next 12 months) + £1,000 (third 12 months) = £3,000
And the fees for Raj are as follows:
Skilled Worker Visa fee: £610 (£
Immigration Health Surcharge (IHS) for three years: £624/year x 3 years = £1,872
Total cost for Alpha Tech Corp is £4,675 and for Raj is £2,482.
These case studies highlight the considerable costs involved in the process of employing overseas workers. Although these fees represent a necessary investment for organisations seeking global talent, they are significant expenditures that both employers and workers must be prepared to manage.
Other Associated Costs with Sponsor Licences
While the primary costs associated with acquiring and maintaining a Sponsor Licence revolve around the licence fee, CoS, and ISC, there are several other expenses that businesses should bear in mind when considering sponsoring an overseas worker. When considering hiring foreign talent, it’s crucial to take into account these additional expenses. Whilst these costs may not be directly related to the application process, they can certainly have an impact on your budget. It’s therefore important to thoroughly evaluate these ancillary expenses before making any final decisions.
HR Compliance and Systems
The UK Home Office requires that businesses maintaining a Sponsor Licence adhere to stringent HR compliance measures. This may require investment in new systems or processes to ensure appropriate record-keeping, tracking of worker activity, and reporting to the Home Office as required. This could involve using specialised software or hiring additional staff, which adds to the overall cost of maintaining the Sponsor Licence.
Legal Advice and Services
Navigating the complexities of the UK immigration system and Sponsor Licence application process may necessitate seeking legal counsel. Immigration solicitors or consultants can provide expert guidance, assist in preparing the application, and help avoid costly mistakes. Their fees can vary depending on the complexity of the case and the law firm’s reputation, so it’s important to factor in those expenses when creating a budget.
Resident Labour Market Test
Prior to sponsoring a foreign worker, businesses might need to carry out a Resident Labour Market Test (RLMT), proving they cannot fill the role with a resident worker. While the RLMT itself has no direct cost, there are implicit costs in terms of time and resources spent on advertising the role and documenting the recruitment process.
Organisations with a Sponsor Licence must also commit to investing in training for resident workers. Apprenticeships or training programs may be necessary depending on the size and type of the company.
Sponsor Licences are typically valid for four years. Upon expiration, businesses must renew their licence if they wish to continue sponsoring foreign workers. The renewal process involves costs similar to the initial application fee, which must be accounted for in the organisation’s long-term budget.
It’s essential to consider these extra costs when calculating the true expense of acquiring and maintaining a Sponsor License. Proper planning and budgeting can help ensure that the process of hiring overseas talent aligns with the business’s financial capabilities and strategic objectives.
The Value Proposition of a Sponsor Licence
Obtaining and maintaining a Sponsor Licence may come at a significant cost, but it’s essential to consider the benefits it brings. The ability to attract and retain highly skilled foreign workers is invaluable and far outweighs the financial investment required. Having a Sponsor Licence can provide a considerable advantage for a company’s growth, innovation, and long-term success.
Access to a Global Talent Pool
With a Sponsor Licence, businesses can unlock the potential to recruit from a global talent pool. This is particularly advantageous for industries that demand specific skills, knowledge, or experience, which might not be readily available in the local market. By casting a wider recruitment net, businesses can address talent gaps effectively, ensuring the right person fills each role.
Business Growth and Innovation
Diverse teams bring a variety of perspectives, ideas, and ways of problem-solving. By hiring overseas talent, businesses gain access to fresh ideas and innovative approaches, which can fuel growth and development. Furthermore, employees from diverse backgrounds can help businesses understand and tap into international markets, strengthening the company’s global standing.
Fostering Diversity and Inclusion
Diversity and inclusion are not only about ticking the right boxes on corporate responsibility. A diverse workforce is a powerful driver of business performance. It fosters a culture of innovation, engagement, and resilience, which are key attributes for any organisation seeking sustainable growth. A Sponsor Licence allows businesses to build and nurture a diverse workforce, enhancing their competitiveness.
Demonstrating Corporate Responsibility
Possessing a Sponsor Licence also signals a business’s commitment to legal compliance and corporate responsibility. It reflects the organisation’s dedication to fair and ethical recruitment practices. This will enhance the company’s reputation, becoming more appealing to top-notch candidates, customers, and partners.
The economic impact of recruiting overseas talent can be substantial. Foreign workers not only contribute to the business they work for but also stimulate economic activity through their spending. They play a vital role in supporting the UK’s economic growth, making a Sponsor Licence an investment in the broader community.
In conclusion, while the costs associated with a Sponsor Licence are undeniable, they should be viewed as an investment rather than an expense. The value generated through access to global talent, innovation, diversity, and economic growth can far outweigh the initial and ongoing costs, delivering significant returns over the long term.
Expert Tips When Considering Sponsor Licence Fees
Securing a Sponsor Licence can be a complex process. From understanding the various fees to navigating the application process, the journey may seem daunting. However, armed with the right knowledge and insights, it can be managed effectively. Here are some expert tips to help you streamline the process:
Before you begin your application, ensure you have a comprehensive understanding of the financial commitment involved. This means not only considering the application fee but also factoring in the ongoing costs such as the Certificate of Sponsorship fee, Immigration Skills Charge, and the costs borne by your prospective employees. Being prepared for these expenses upfront will help you manage your budgets more effectively.
Understand Your Business Size
The size of your business plays a significant role in determining the Sponsor Licence fee. Therefore, it is essential to accurately assess whether your organisation falls into the small or large category as per the Companies Act 2006. Misjudging your business size can result in a costly mistake.
Leverage Available Fee Reductions and Exemptions
Certain organisations and workers can avail fee reductions or exemptions. It is worth investigating these opportunities to minimise costs where possible. Make sure you are aware of the specific criteria that needs to be met to benefit from these reductions.
Comply with Sponsor Duties and Responsibilities
Once you obtain a Sponsor Licence, you have an obligation to comply with a set of duties and responsibilities. This includes keeping up-to-date records and reporting duties, amongst others. Failure to comply can result in significant penalties, including suspension or revocation of your licence.
Consider the Long-term Value
It’s important to consider the long-term benefits when evaluating the expenses involved in obtaining a Sponsor Licence. Despite the apparent magnitude of the costs, the advantages that come with it could prove to be invaluable. The ability to recruit globally can transform your business, fostering innovation and growth. The initial financial commitment can indeed be viewed as an investment in your organisation’s future success.
Seek Professional Guidance
Navigating the complexities of Sponsor Licence fees can be challenging. If it’s your first time applying, it may be advantageous to consider seeking guidance from a professional. Immigration advisors can help you understand the process, fees, and your obligations as an employer, ensuring a smoother application process and compliance.
Remember, the process of securing a Sponsor Licence is a significant commitment but one that can offer considerable benefits to your organisation. With careful planning, diligent preparation, and sound advice, you can manage the process effectively and reap the rewards that come with access to a global talent pool.
Understanding the costs associated with obtaining a Sponsor Licence is integral to any UK organisation looking to attract talent from overseas. The fees involved extend beyond the initial Sponsor Licence application fee, encompassing costs related to Certificates of Sponsorship, Immigration Skills Charges, and other associated costs, as well as fees imposed on the workers themselves.
Although the fees associated with obtaining a Sponsor Licence may seem steep, especially for smaller organisations, it’s important to recognise their value in light of the benefits that the licence offers. By having access to a global talent pool, businesses can capitalise on a diverse array of skills, knowledge, and perspectives that can significantly enhance their growth and innovation. Therefore, it’s essential to view the financial commitment as an investment in your company’s future, rather than just an expense.
There are ways to mitigate these costs, with certain fee reductions and exemptions available, and potential savings to be made through careful planning and understanding of the various charges involved. Businesses also need to be aware of their size and the origin of their prospective workers, as these factors can significantly impact the overall cost.
In today’s business world, navigating the complex landscape of obtaining a Sponsor Licence can be overwhelming. That’s why seeking expert advice is crucial. With the right support and guidance, companies can make informed decisions that will ensure the process is managed efficiently and effectively.
While there may be expenses and challenges along the way, the long-term benefits and opportunities that come with a Sponsor Licence make it a wise investment for any company looking to gain a competitive edge, expand globally, and diversify their teams.
Frequenty Asked Questions About Sponsor Licence Fees
How much is the Sponsor Licence fee in the UK?
The Sponsor Licence fee varies depending on the size of the organization. For small or charitable organizations, the fee is £536, while for medium or large organizations, it is £1,476. It’s crucial to note that these fees may change over time, so we recommend checking the most up-to-date information on the official government website or relevant authorities before proceeding with the application.
Are there any exemptions or fee reductions available for certain roles in the Sponsor Licence process?
Yes, certain roles and situations can qualify for exemptions or fee reductions. Small or charitable sponsors receive a reduced Immigration Skills Charge (ISC) compared to larger sponsors. Roles in the shortage occupation list may have a lower minimum salary and a reduced application fee for stays of up to 3 years. Workers transitioning from a student visa to a Skilled Worker visa, as well as some researchers and PhD-level occupations, are exempt from the ISC. The Healthcare and Social Care Visa has lower application fees, and applicants under this category are exempt from the Immigration Health Surcharge (IHS). Additionally, certain health and social care workers may be eligible for an IHS reimbursement. Eligibility criteria apply, so it’s important to review the latest guidelines to determine if your situation qualifies for these benefits.
About the Author
With over 15 years of immigration law experience at top London firms, Jay Moghal established Lexus Law in 2020 to offer prompt, personalised services without the bureaucratic hurdles associated with larger firms.