Changes to small companies regime: Immigration implications for sponsors

As a result of changes introduced by the Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024, the size classification of companies under the Companies Act 2006 has been amended as of 6 April 2025. This is an important change for companies holding, or wishing to obtain, a sponsor licence as it could impact on the cost of visa sponsorship and the company’s reporting duties to the Home Office.

What has changed?

Prior to 6 April 2025, under section 382 of the Companies Act, a company would qualify as small if it met two out of three criteria within the same financial year. The criteria were:

• a turnover of not more than £10.2 million;
• a balance sheet total of not more than £5.1 million;
• no more than 50 employees.

Following amendments to the Companies Act, the qualifying criteria to be considered a small company have changed. A company will now be considered small if two out of three of the following criteria are met in the same financial year:

• a turnover of not more than £15 million;
• a balance sheet total of not more than £7.5 million;
• no more than 50 employees.

Why is this important for sponsors?

The Home Office sets the fees associated with visa sponsorship by reference to a company’s size. A company is eligible to pay the ‘small’ fee if it is subject to the small companies regime as set out in the Companies Act 2006. Following an increase to sponsor licence fees on 9 April 2025, the small sponsor licence fee is now £574, versus the large sponsor fee of £1,579.

It is not only the cost of applying for a licence that is affected by these changes. Once a licence is in place, sponsors are liable (in most cases) to pay an Immigration Skills Charge (ISC) each time it assigns a Certificate of Sponsorship (CoS) to a Skilled or Senior or Specialist Worker. The amount of ISC payable is calculated based on the number of years the worker is being sponsored, and, as with the licence fee, the size of the company. The ISC fee for small sponsors is £364 per year, compared to £1,000 per year for large sponsors.

When a company applies for a licence, it is therefore important that it correctly identities the size of the organisation as this will determine not only the licence fee payable, but also the level of Immigration Skills Charge to be paid when assigning Certificates of Sponsorship. A change in company size classification can therefore have significant costs implications for a business.

Existing sponsors should also be aware of their reporting duties to the Home Office. Organisational changes, including changes in an organisation’s size, must be reported to the Home Office within 20 working days of the change. Once the change in size has been processed and accepted by the Home Office, the company will be liable to pay the corresponding ISC on any CoS assigned thereafter. Where a company needs to assign a CoS after the change in size has been reported but before it has been accepted by the Home Office, it will receive a partial refund of the difference between the large and small ISC fee once the change has been verified by the Home Office. In addition to the financial implications of reporting such changes, it is also important to note that failure to comply with your sponsor duties can result in compliance action being taken against the company. This should be a genuine concern for sponsors, particularly in light of the recent increase in enforcement activity, including sponsor licence revocations, by the Home Office.

For further information on how we can support you with any potential organisational changes and sponsor reporting implications, please contact a member of our immigration team.