Skilled Worker Salary Changes: What Employers Need to Know

When the Home Office increased Skilled Worker salary thresholds in April 2024, much of the initial focus was on discounted salary options. Could a new entrant rate help? Was the role on the Immigration Salary List (ISL)? Could a relevant PhD reduce the minimum salary requirement?

Those questions remain important. However, the immigration landscape has moved on. Since the rules changed in July 2025, as discussed in Fragomen’s previous blog, the UK government has taken further steps to make Skilled Worker sponsorship narrower, more expensive and more closely linked to domestic workforce planning. While the changes affect all sponsors, small and medium-sized enterprises (SMEs) are likely to feel the impact most acutely. The key question is no longer whether a discounted salary rate is available, but whether sponsorship remains commercially and operationally viable for the role, the business and the employee's long-term immigration pathway.

This matters because SMEs often use sponsorship differently from larger employers. A multinational may sponsor at scale, with established mobility teams, salary benchmarking and centralised compliance support. An SME may sponsor only occasionally, perhaps to retain a Graduate visa holder, hire a specialist technician, recruit into a hard-to-fill digital or creative role or bring in a senior employee needed to support growth. For these businesses, a salary increase or change in role eligibility can determine whether the hire is possible at all.

How Have Skilled Worker Sponsorship Rules Changed?

The April 2024 changes to Skilled Worker salary requirements already represented a significant shift. The general Skilled Worker salary threshold increased to £38,700 or the occupation-specific going rate if higher.

Since then, the route has tightened further. From 22 July 2025, the general threshold for most Skilled Worker applicants increased to £41,700, with salary and going-rate requirements updated in line with earnings data. The reform also raised the skills threshold to graduate-level roles (Regulated Qualifications Framework (RQF) Level 6) in most cases, increased salary and going-rate requirements, introduced transitional arrangements and created interim shortage arrangements for certain roles below graduate level.

For employers, the practical impact is not only legal but commercial. A salary may be appropriate for the role, location and business size, yet still fall below the Home Office threshold. This is particularly noticeable outside London and in sectors where pay progression is structured more gradually.

The Migration Advisory Committee (MAC) has recognised that median occupation-specific thresholds can create difficulties where an occupation covers a wide range of job titles or where salaries vary by location. It has suggested that a 25th percentile occupation-specific threshold may be sufficient to protect against undercutting, while the general threshold could perform the main function of controlling migration and fiscal impact.

These are recommendations rather than rule changes, but they demonstrate that the Skilled Worker salary framework remains under active review.

How Useful Are Salary Thresholds Under the Current Rules?

Discounted rates remain available in certain cases; new entrants, relevant PhD holders, STEM PhD holders and some roles on the ISL may benefit from lower thresholds, subject to minimum salary and the applicable percentage of the going rate. However, sponsors should be cautious about treating discounts as a long-term solution.

The new entrant rate can be useful for early-career hires, particularly where an employer wishes to retain a Graduate visa holder. But it is time-limited and employers should plan for salary progression before the discount expires. If the employee cannot meet the full threshold at the extension or settlement stage, the business may face disruption and the employee may face uncertainty.

The PhD discount also requires careful consideration. It only applies where the qualification is relevant to the role. The MAC has also recommended abolishing the general PhD salary discount, noting that there is no evidence that PhD holders are paid less. That recommendation has not, of itself, changed the rules, but it signals that employers should not build recruitment assumptions around the current discounts.

Can Employers Still Rely on the ISL and Temporary Shortage List (TSL)?

The ISL was introduced in April 2024 to replace the Shortage Occupation List. It continues to provide reduced salary thresholds for listed roles and Home Office guidance confirms that eligible jobs on the list may qualify at 80% of the usual minimum rate, with standard and lower rates published by occupation. In practice, sponsors may find its usefulness limited because relatively few occupations are currently included on the ISL.

The TSL also provides an alternative route for certain roles. However, the TSL is not a stable long-term workforce planning tool. It is intended to provide time-limited access for certain RQF 3–5 occupations that are crucial to the Industrial Strategy or critical infrastructure, where shortages exist and sectors can demonstrate plans to maximise use of the domestic workforce.

It is worth noting that the TSL, in its current form, is due to expire on 31 December 2026, although its contents may change before then and future arrangements remain uncertain.

For sponsors, this is important. A TSL listing should not be treated as a permanent workaround. Access may be temporary, sector-specific and dependent on broader workforce planning. For example, businesses in engineering, construction and creative industries, looking to benefit from sponsorship in medium skilled roles, should monitor developments closely while also planning for the possibility that access may narrow or fall away.

What Should Employers Consider Before Sponsoring a Worker?

Employers should consider sponsorship at the start of recruitment, not after a preferred candidate has been selected. HR and Global Mobility teams should check the correct Standard Occupational Classification (SOC) code, skill level, salary threshold, working hours, eligibility for any discount, future salary progression and the likely total sponsorship cost. They should also assess whether the business has the HR systems needed to manage sponsor duties.

In some cases, sponsorship will remain the right tool. In others, businesses may need to consider alternative workforce strategies, including Graduate route planning, domestic training, role redesign or Global Business Mobility options where there is an overseas linked entity.

The main takeaway is that Skilled Worker sponsorship is no longer a simple immigration add-on. For SMEs, it is now a strategic workforce planning issue. Early assessment can help preserve access to international talent while reducing refusal risk, compliance exposure and unexpected cost.

How Fragomen Can Help

Fragomen supports employers with Skilled Worker eligibility assessments, salary threshold analysis, SOC code mapping, sponsor licence compliance, cost modelling, tailored HR training, preparing written immigration policies and broader workforce planning initiatives.

For SMEs navigating a more restrictive sponsorship environment, early advice can help identify viable options and reduce operational risk.

Need to Know More?

For further information or questions related to the UK immigration rules, please contact Senior Associate Charlotte Roberts at [email protected].

This blog was published on July 15, 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 Fragomen on  LinkedIn, Facebook and Instagram.