From 6 April 2025, amendments to the Companies Act 2006 will alter how companies determine their size. While primarily relevant to corporate reporting and audit thresholds, these changes can have implications for licenced sponsor holders, particularly in relation to the level of the Immigration Skills Charge (ISC) payable and sponsor compliance obligations. It is crucial therefore that businesses that sponsor skilled workers are aware of how changes to their size classification can impact the costs of sponsorship and their duties as licenced sponsors.
Why Does Company Size Matter?
Under the UK’s Points-Based Immigration System, such fees associated with sponsorship are determined in part by the size of the organisation sponsoring the individuals. Organisations that qualify as small or charitable sponsors benefit from reduced fees when the following are considered:
- Applying for a sponsor licence
- Immigration Skills Charge (ISC)
The Home office determines an organisation’s size using the guidelines provided in the Companies Act 2006.
What is Changing?
In defining ‘small’ and ‘medium/large’ sponsors, the Home Office relies on the definitions under the Companies Act. From 6 April 2025, a company will no longer qualify as ‘small’ if it exceeds two or more of the following updated thresholds: a turnover of £15 million (previously £10.2 million), a balance sheet total of £7.5 million (previously £5.1 million), or 50 employees (unchanged).
If, following these changes, a company is reclassified as medium or large or downgraded to small, this will affect its obligations under the Immigration Rules, including the fees it will be required to pay when sponsoring workers.
The Immigration Skills Charge
The Immigration Skills Charge (ISC) is payable by employers when they assign a Certificate of Sponsorship to a Skilled Worker. The amount payable under ISC will depends on the duration of the proposed employment and the size of the employer.
Currently, small or charitable sponsors are charged £364 for the first 12 months and £182 for each additional 6-month period, while medium or large sponsors pay £1,000 initially and £500 for each 6-month extension. An increase in company size classification could therefore result in significantly higher costs for sponsoring skilled workers.
The Immigration Skills Charge (ISC), which employers must pay when assigning a Certificate of Sponsorship to a Skilled Worker, varies based on the length of employment and the size of the company. As a result, reclassification to a larger company size could lead to significantly higher sponsorship costs.
An increase in company size classification could therefore result in significantly higher costs for sponsoring skilled workers.
Impact of Structural Changes
When a company is assessing its size, especially for the purposes such as qualifying for exemptions or understanding which thresholds to apply, it must consider reportable structural changes including:
Mergers
This is where two or more businesses merge to form a single new entity, the resulting company may exceed the small company threshold as discussed above. This will depend on the combined turnover, balance sheet total and employee number of the new entity. A merger into a larger organisation may consequently alter a sponsors classification and increase the applicable ISC rates.
Sales and Acquisitions
Buying or selling parts of a business can also affect how a company is classified. Companies must reassess their status following such events to ensure compliance.
These structural changes must be taken into account not only at the end of the financial year, when company size is formally addressed, but also during the accounting period if significant change occurs.
Sponsor Duties: Compliance and Reporting
If your organisation’s size or charitable status changes, you are required to:
- Notify the Home Office within 20 working days via the Sponsor Management System
- Provide supporting evidence, which may include updated company accounts or an employee list
- Report any structural changes, including mergers, acquisitions, takeovers or similar events
As well as affecting company size, structural changes such as mergers or acquisitions will usually result in other reportable activities relating to the sponsor licence, including applications for new licences themselves in some cases.
Failure to appropriately report events could constitute breach of your sponsor duties, placing your sponsor licence at risk.
This obligation applies both to existing sponsors and to those with ongoing sponsor licence or visa applications. If your classification changes mid-application, it may affect the outcome or result in additional charges.
How can we help?
If you are uncertain whether these changes apply to you, please contact a member of our Business Immigration team.
