At a glance
- The UK government has announced major immigration reforms aimed at reducing net migration and increasing employer compliance obligations.
- Sponsorship costs will rise significantly from 16 December 2025, with the Immigration Skills Charge (ISC) increasing for all sponsors.
- The illegal working regime will expand to cover contractors, gig workers, and supply chains, with civil penalties already at GBP60,000 per breach.
- A consultation proposes replacing the five-year settlement route with a merit-based system and abolishing the long residence route, impacting current pathways.
- Employers should act now: Accelerate Certificates of Sponsorship (CoS) assignments, audit onboarding processes, and prepare for stricter compliance checks and reporting duties.
The UK government has announced a series of immigration reforms that will reshape sponsorship costs, compliance obligations, visa eligibility and settlement pathways. These changes reflect a continued policy focus on reducing net migration and tightening employer responsibilities. Below we provide an overview of the key developments, the practical implications, and what employers should do now.
ISC increase: Effective 16 December 2025
The ISC will rise substantially for any CoS assigned on or after 16 December 2025:
- Medium and large sponsors: GBP1,000 to GBP1,320 per sponsored worker per year.
- Small and charitable sponsors: GBP364 to GBP480 per year.
This increase is confirmed in the Immigration Skills Charge (Amendment) Regulations 2025 and forms part of the government’s strategy to reduce reliance on migrant labour while funding domestic skills training.
Action: Consider accelerating CoS assignments before 16 December to lock in current rates and adjust recruitment budgets for new sponsorship costs post-16 December.
Expansion of illegal working regime
The Border Security, Asylum and Immigration Act 2025 (Act) has now passed through Parliament, receiving Royal Assent on 2 December 2025. Under Section 48 of the Act, the scope of the UK’s illegal working civil penalty regime has been significantly expanded.
As set out in our earlier article, previously, liability was largely confined to direct employment relationships. Under the new provision, in addition to direct employment, ‘other working arrangements’ are now in scope of the illegal working civil penalty regime. This includes:
- Non-employees engaged under a ‘worker’s contract’.
- Self-employed contractors.
- Gig economy workers and platform-based service providers.
- Subcontractors and casual / zero-hours workers.
Once implemented, employers and businesses engaging these categories will be subject to the provisions of Section 15 of the Immigration, Asylum and Nationality Act 2006.
The section also introduces expanded enforcement powers and clarifies that liability can extend through complex supply chains, reaching multiple businesses in relation to the same instance of illegal working.
An exact date for the implementation of this change is yet to be confirmed, as Section 48 will come into effect on a date to be set out in future commencement regulations.
These regulations are expected to be accompanied with updated right to work guidance and a revised statutory code of practice, published by the Home Office. These will be shaped by the public consultation that is currently underway and due to close on 10 December 2025.
Why this matters: Civil penalties for illegal working have already increased to GBP60,000 per breach. The extension of the Right to Work scheme to a wider range of workers and subcontractors would expose businesses to a greater risk. Businesses engaging contingent labour should audit onboarding processes now, identify gaps in visibility of workers and consider responding to the consultation before the 10 December deadline.
Compliance surge and reporting duties
The Home Office has intensified compliance activity, including increased licence suspensions and site visits. We have seen an increase in data sharing between the Home Office and the HMRC with respect to discrepancies in pay between those on the Certificate of Sponsorship and that being reported to the HMRC. Sponsors must ensure that any pay reduction is reported to the Home Office promptly, even if temporary or for valid reasons such as maternity or sick leave.
There has also been a marked rise in Home Office engagement with visa applicants prior to approval, particularly through telephone interviews focused on job roles and duties. These calls aim to verify that the role described in the CoS aligns with the applicant’s actual responsibilities and the relevant occupation code.
Practical point: Failure to report accurately can lead to compliance action such as licence suspension or revocation. As new visa applications and requests for CoS allocations can trigger Home Office inspection, internal audits should be carried out ahead of requests being submitted to catch any reporting gaps. HR systems should be reviewed to ensure timely reporting, and HR teams trained on expanded triggers. Sponsors should maintain accurate and up-to-date job descriptions and ensure there are no inconsistencies with role details.
Delays in priority processing for undefined CoS
Priority slots for undefined CoS allocations are capped at 100 per day, and standard processing can take up to 18 weeks. The priority service is currently oversubscribed which is resulting in delays in requests for additional Certificates of sponsorship.
Action: Advance planning is essential to ensure that CoS requests are submitted in a timely manner before work-start or visa expiry dates. Sponsors should also be ready to respond to further requests for information to minimise delays.
Earned settlement: Proposed reform (including long residence route)
The Home Office consultation on extending the qualifying period for certain immigration routes for settlement was opened on 20 November 2025.
The consultation, entitled 'A Fairer Pathway to Settlement', sets out the government’s proposal to replace the current five-year route to settled status (known as Indefinite Leave to Remain) and abolish the current ten-year long residence route.
The consultation also confirms that the changes will apply retrospectively, which will impact those already in the UK on a pathway to settlement at the point of implementation.
The new model would introduce:
- A baseline qualifying residence period for settlement of ten years for most applicants. This can, however, be increased or decreased depending on the applicant’s contributions and actions.
- For all applicants, there will be new additional criteria beyond residency such as good conduct, economic contribution and integration.
- Accelerated routes for high earners and key public service roles – see below table.
- Extended periods (15–30 years) for breaches or reliance on public funds.
The considerations that will reduce the baseline qualifying period for settlement are set out in Table 2 of the consultation document. These are subject to consultation (except where indicated) and set out below:
| Pillar | Attribute | Adjustment to baseline qualifying period |
| Integration | Applicant has competency in English language at C1 Level under the Common European Framework of Reference for Languages | Minus one year |
| Contribution | Applicant has earned a taxable income of GBP125,140 for three years immediately prior to applying for settlement | Minus seven years |
| Contribution | Applicant has earned a taxable income of GBP50,270 for three years immediately prior to applying for settlement | Minus five years |
| Contribution | Applicant has been employed in a specified public service occupation for five years | Minus five years |
| Contribution | Applicant has worked in the community (volunteering, etc) | Minus three to five years |
| Entry and residence | Applicant holds a permission as the parent / partner / child of a British citizen and meets core family requirements | Minus five years – Not subject to consultation |
| Entry and residence | Applicant holds a permission granted under the British National Overseas route | Minus five years – Not subject to consultation |
| Entry and residence | Applicant has three years continuous residence as the holder of a permission as a Global Talent worker or Innovator Founder | Minus seven years |
| Entry and residence | Acknowledgement of specific and vulnerable groups having a reduction | Subject to consultation |
The Home Secretary has noted that the intention is to start implementing the proposed changes in April 2026.
The consultation also confirms that the changes will apply retrospectively, which will impact those already in the UK on a pathway to settlement at the point of implementation.
Why this matters: The removal of the long residence route is a major shift for individuals who have relied on aggregating time across different visa categories to qualify for settlement. Those with complex immigration records and in roles below RQF level 6 could face considerably longer qualifying periods. This will result in higher costs for sponsors, due to an increase in extension applications required to retain right to work.
Employers should advise employees who may be affected by this change and monitor consultation outcomes (closing 12 February 2026).
Electronic Travel Authorisation (ETA): Mandatory from 25 February 2026
Nationals of visa-free countries must hold an ETA before travel. Whilst the ETA was introduced in stages from last year, from 25 February 2026, carriers will enforce a strict ‘No permission, no travel’ policy.
Action: Update travel policies and pre-trip checks and communicate ETA requirements to frequent travellers.
Looking ahead
2025 has been a pivotal year for UK immigration policy under the Labour government, marked by a clear drive to reduce net migration, tighten compliance, and increase employer accountability. Key reforms included higher sponsorship costs, stricter reporting obligations, and consultations signalling a shift towards merit-based settlement. These changes reflect a broader policy agenda focused on balancing economic needs with public confidence in the immigration system.
As we move into 2026, employers should expect this trajectory to continue. The introduction of higher English language thresholds, mandatory ETA for visa-free travellers, and the likely abolition of the long residence route in favour of an earned settlement framework will require proactive workforce planning and robust compliance processes. Engagement with ongoing consultations and early preparation will be critical to navigating this evolving landscape.
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