Recouping Immigration Costs: Are Supportive Employers at Risk of Non-Compliance?

Navigating the world of immigration can be challenging for sponsors, particularly smaller sponsors with limited exposure to, and therefore limited experience with, immigration requirements. Changes to the immigration rules can sometimes feel like they come thick and fast, and before you have had the chance to fully understand one change, another may already have been introduced.

One change that may have required additional consideration for businesses relates to the recoupment of immigration costs.

Home Office Position on Recoupment

By way of background, in December 2024, the Home Office clarified its guidance on which costs sponsors are prohibited from passing on to employees.

The current position is that a sponsor licence will normally be revoked where a sponsor recoups, or attempts to recoup, the following from the applicant/employee:

• • • Sponsor licence fees, including fees for adding routes to an existing licence and any associated administrative costs
    • Certificate of Sponsorship (CoS) fees and any associated administrative costs
    • Immigration Skills Charge (ISC), where applicable

The update prompted various questions from employers, including what falls under “associated administrative costs,” which costs can be recovered and what happens if an employer loans the money to an employee.

Put simply, associated administrative costs are costs incurred by the employer to obtain, use or maintain the sponsor licence. This includes fees for legal advice relating to applying for, using or maintaining the sponsor licence, or assigning, requesting or applying for a CoS.

It also includes immigration services provided by a third party to a sponsored worker where the worker did not have a genuine choice in whether, or how, to obtain that advice or those services.

How Recoupment Can Affect Skilled Worker Salary Requirements

But there is another point to keep in mind for Skilled Workers, as recouping permissible immigration costs can directly affect whether the minimum salary threshold is met.

When assessing salary for the Skilled Worker route, only guaranteed basic gross pay and other guaranteed payments treated in the same way for tax, pension and National Insurance purposes are taken into account. Payments relating to immigration costs, such as visa fees or the Immigration Health Surcharge (IHS), do not count towards salary.

On top of that, any payments made by a worker to their sponsor will generally be deducted from salary for threshold assessment purposes. This includes salary deductions, loan repayments or even “investments”, with the payments averaged over the length of sponsorship.

A common example is where an employer pays an immigration provider’s invoice and then recoups some of the costs from the employee. This will usually be factored into the salary assessment.

That said, there is an important distinction when it comes to genuine loans. A genuine loan provided on top of salary will not impact the threshold.

For example, if an employer loans an employee £3,105 on top of their salary to cover the IHS and the employee repays this, their annual salary remains unchanged. If the salary met the threshold before the loan, it would continue to meet the threshold.

However, if that same £3,105 is not provided as a loan but is instead recouped from the employee’s salary, it will be averaged throughout the sponsorship period. Over three years, that amounts to £1,035 per year being deducted from the assessed salary. This could push someone below the minimum threshold and make them ineligible.

There is an exception for genuine optional benefits, such as salary sacrifice arrangements, where the worker has a real choice and the costs are not related to business or immigration expenses.

Repayment Arrangements: Where It Can Become Counterintuitive

From an employer’s perspective, this is where it can become a bit counterintuitive. Covering costs upfront and allowing repayment in instalments may feel supportive, but it can have unintended consequences for sponsorship eligibility.

This extends to dependant costs as well. If these are recouped from the sponsored worker, even at a later stage, the salary assessment may need to be revisited.

For employees whose salaries are comfortably above the threshold, this may be less of an issue. However, where salaries are close to the minimum threshold, repayment arrangements require a much more careful, case-by-case assessment.

It is also worth noting that repayment arrangements are reportable. Sponsors must disclose these on the CoS, either before assigning the CoS or, where the arrangement is entered into later, by reporting it via the Sponsor Management System (SMS).

Key Takeaways for Sponsors

In short, Sponsors should take care when structuring any repayment arrangements. What may seem like a straightforward and even helpful approach, such as covering costs upfront and recovering them over time, can have unintended consequences when it comes to salary assessments and ongoing sponsorship eligibility.

Where there is any uncertainty, it is worth reviewing the approach early. A small adjustment at the outset can help avoid more significant compliance issues later, including the risk of a visa application being refused or sponsorship no longer being viable.

Need to Know More?

For questions related to recoupment of immigration costs, please contact Director Shanaz Haque at [email protected].

This blog was published on 17 August 2026 and reflects information available at that time. Updates may occur as policies evolve. To stay informed on the latest immigration news and analysis, please subscribe to our alerts and follow us on LinkedIn, Twitter, Facebook and Instagram.