Employers sponsoring workers under the Skilled Worker route have to meet specific Home Office requirements and costs. A change to the tax rules affects how two of those costs are treated when an employer pays them. It is important to understand which payments are covered and which remain outside the exemption.
What is changing for Skilled Worker sponsorship fees?
When an employer sponsors someone under the Skilled Worker route, it has to pay certain mandatory charges to the Home Office. These include the Immigration Skills Charge and the fee for assigning a Certificate of Sponsorship. A Certificate of Sponsorship is the electronic record an employer assigns to a worker to support their visa application.
From 28th October 2026, an employer’s payment of either of these two charges will no longer create an Income Tax liability for the employee or prospective employee. HMRC has also confirmed that the change prevents a related Class 1A National Insurance charge for the employer.
The fees themselves have not been abolished or reduced. Employers remain responsible for paying the charges. The change is about how the payment is treated for tax purposes, not about removing the sponsorship costs.
Which sponsorship costs are covered by the exemption?
The exemption is deliberately limited. It covers only the two mandatory sponsorship costs listed below, where an employer pays them in respect of an employee or prospective employee sponsored under the Skilled Worker route.
Covered by the exemption
Immigration Skills Charge
The charge the sponsoring employer must pay for a sponsored worker, where it applies.
Certificate of Sponsorship fee
The fee the employer pays when it assigns a Certificate of Sponsorship.
Not covered by the exemption
Visa application fees
The cost of applying for entry clearance or permission to stay.
Immigration Health Surcharge
The health surcharge paid as part of many immigration applications.
Sponsor licence fees
The fee an organisation pays to apply for or maintain a sponsor licence.
The exemption is also limited to the Skilled Worker route. It does not automatically cover sponsorship costs under other work visa routes. Any excluded immigration-related costs remain subject to the normal tax rules that apply to them.
When does the exemption start?
The effective date is 28th October 2026. It applies to qualifying payments made on or after that date. A payment made before 28th October 2026 is not brought within this new exemption simply because the worker remains employed or sponsored after the start date.
HMRC says the exemption applies whether or not the individual has started employment when the employer pays the charge. It also applies whether or not the worker’s subsequent visa application is successful.
Has the tax change become law?
HMRC has published the policy and confirmed that the exemption applies to qualifying payments from 28th October 2026. The government says it will introduce the necessary legislation in the Finance Bill 2026-27. This legislation will amend the Income Tax rules to provide the specific exemption.
This means the effective date has been announced, but the detailed legislative change is still to be made through the Finance Bill. Employers should check HMRC guidance for any updates as the legislation progresses.
Does the change apply to existing sponsored workers?
Yes. The exemption can cover people who are already employed as well as prospective employees. The payment must still meet the other conditions and be made on or after 28th October 2026.
HMRC’s policy paper does not spell out every possible extension or change-of-employment situation. Employers should check the detailed rules before assuming a particular payment qualifies.
What does this mean for employers?
Employers remain responsible for paying the Immigration Skills Charge and Certificate of Sponsorship fee where required. They must not treat the exemption as permission to pass those costs to the sponsored worker. HMRC confirms that employers are not permitted to recover either of these charges from the person they sponsor.
HMRC expects the administrative impact to be small. Employers that currently report these payments as taxable benefits may need to update payroll or benefits processes so qualifying payments made from 28th October 2026 are no longer treated that way. HMRC says there should not be a new ongoing reporting requirement.
The change also removes the associated Class 1A National Insurance charge that would otherwise arise for the employer where there is an Income Tax charge on the benefit. This is a tax treatment change, not a grant or reimbursement of the sponsorship fees.
Do sponsored workers need to do anything?
No action is required from the sponsored individual to benefit from the exemption. HMRC says the measure is not expected to change the way individuals deal with HMRC, because the qualifying employer payments will no longer create an Income Tax charge for them.
If a worker sees one of these payments listed as a taxable benefit in payroll information after the change takes effect, they can ask their employer to check that the payment has been treated correctly. This is a practical step if something appears inconsistent, not a new application process.
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This article explains the announced tax exemption using HMRC’s published policy paper and should not be treated as individual tax or immigration advice. Check current official guidance for your circumstances.