How to Calculate Sponsored Worker Salary: 2026 Guide

Section A: Select the Correct Salary Requirement

A sponsored worker’s salary cannot be checked against a single universal figure. The minimum payable amount depends on the worker’s occupation code, the applicable salary option, the date on which the relevant sponsorship arrangements began and the number of hours they will work.

For most new Skilled Worker applications, the starting point is Option A. The worker must be paid at least £41,700 a year and at least the full going rate for the relevant occupation code. Both requirements must be met. A salary of £45,000 will not qualify where the adjusted going rate is £47,000, just as payment at the full going rate will not be enough where the annual salary remains below the applicable general threshold.

Lower salary requirements can apply where the worker qualifies under another permitted option. These include workers with a relevant PhD, workers with a relevant STEM PhD, eligible new entrants, specified health and education roles and jobs included on the Immigration Salary List or Temporary Shortage List, where the relevant salary option and route conditions apply. Transitional salary provisions may also apply where the worker was first sponsored under the Skilled Worker or predecessor Tier 2 route before 4 April 2024 and has held continuous permission since then.

The lower threshold should never be selected simply because the proposed salary falls below the standard rate. Each option has separate eligibility conditions which must be satisfied and evidenced. A worker cannot, for example, be treated as a new entrant solely because they are young or relatively inexperienced. The sponsor must establish that the worker falls within one of the defined new entrant categories and must also account for the maximum period during which the concession can be used.

The occupation code must be identified before any meaningful salary calculation can be carried out. Sponsors should select the code that most accurately reflects the duties and responsibilities of the role, rather than choosing the closest code with a lower going rate. The Home Office can assess the job description, seniority, required experience, organisational structure and actual work undertaken when deciding whether the code used on the Certificate of Sponsorship is appropriate.

Errors at this stage tend to affect every calculation that follows. An incorrect occupation code can result in the wrong going rate, the wrong eligibility assessment and, in some cases, sponsorship of a role that is not eligible under the current Rules. Salary compliance cannot be corrected by paying above the threshold for an occupation code that does not genuinely describe the job.

Sponsors should not assume that a salary discount used for the worker’s current grant will remain available at settlement. The settlement salary requirements operate differently and should be checked separately before any indefinite leave application.

Salary calculation sequence

Before assigning a Certificate of Sponsorship, the sponsor should:

• identify the correct SOC 2020 occupation code
• confirm that the job is eligible for sponsorship
• establish which salary table applies
• identify the salary option the worker is relying on
• check that every condition of that option is met
• calculate the applicable going rate against the worker’s weekly hours
• compare the adjusted going rate with the relevant annual threshold
• confirm that the proposed salary meets every applicable minimum

The result is not always the figure displayed in the published occupation table. Most going rates are based on a 37.5-hour working week and must be adjusted where the worker’s stated hours differ. Separate arrangements apply to certain health and education occupations, where the published national pay scale and reference working week may determine the calculation.

Sponsors should also distinguish between workers applying under the current salary framework and those who qualify for transitional rates. Options F to J apply only to specified workers who were sponsored before 4 April 2024 and have maintained continuous Skilled Worker permission. They are not alternative rates available to new applicants.

The Certificate of Sponsorship should record the salary and working hours that will apply in practice. Figures should be agreed with payroll and the relevant operational manager before sponsorship is approved. Salary calculated solely by HR or an external adviser, without checking how the role will actually be worked and paid, creates an avoidable gap between the sponsorship record and the employer’s evidence.

In the current enforcement environment, the Home Office is likely to look beyond the mathematical result. It may examine whether the occupation code is credible, whether the selected salary option genuinely applies and whether the stated hours and salary are consistent with contracts, rotas, payroll records and HMRC reporting. A compliant calculation therefore starts with the substance of the job, not the desired immigration outcome.

Section B: Calculate the Going Rate Against the Worker’s Hours

The annual figure shown in Appendix Skilled Occupations is not necessarily the amount the worker must be paid. For most occupations, the published going rate is based on a 37.5-hour working week and must be adjusted to reflect the weekly hours stated on the Certificate of Sponsorship.

The calculation is:

Published annual going rate ÷ 37.5 × sponsored weekly hours

A role with a published going rate of £45,000 would therefore require a salary of £54,000 where the worker is sponsored to work 45 hours each week:

£45,000 ÷ 37.5 × 45 = £54,000

Paying the worker £45,000 would not satisfy the going rate in that example. The worker would be completing 20% more hours than the working pattern on which the published figure is based, so the required annual salary also increases by 20%.

The same calculation applies in the other direction. Where the worker is sponsored for 30 hours each week, the adjusted going rate would be:

£45,000 ÷ 37.5 × 30 = £36,000

A reduced going rate does not automatically reduce the separate general salary threshold. The worker must still meet the annual threshold attached to the salary option being relied on. A part-time role may therefore satisfy the pro-rated occupational going rate but fail because the annual salary is below the required general threshold.

Use the hours that will actually be worked

The weekly hours entered on the Certificate of Sponsorship should reflect the role in practice. Sponsors should not state 37.5 hours where contracts, rotas or operational requirements show that the worker will routinely work 40, 45 or 48 hours.

Unpaid breaks should not normally be included as working time. Paid contractual hours, guaranteed overtime and other hours the worker is required to complete should be considered when establishing the sponsored working pattern. Optional overtime which the worker may accept from time to time is different from additional hours that are routinely expected or needed to earn the stated salary.

A contract describing additional hours as voluntary will carry limited weight where rotas show that the worker regularly has to complete them. The Home Office can compare the hours recorded on the Certificate of Sponsorship with the employment contract, payroll records, timesheets, shift schedules and evidence obtained directly from the worker.

Where working hours vary, the sponsor should identify the regular working cycle and calculate the average hours across that cycle. The arrangement should be sufficiently clear for the sponsor to explain how the salary and hours were calculated and for payroll records to demonstrate that the worker has been paid correctly throughout the cycle.

Do not confuse the annual threshold with the going rate

The annual salary threshold and the occupational going rate are separate tests. Their treatment of working hours is not identical.

For the general annual salary threshold, only pay attributable to the first 48 hours of work each week can normally be counted. Salary for additional hours cannot be used to bring an otherwise insufficient salary up to the required annual threshold.

An exception applies to regular working patterns in which hours and pay vary from week to week. Hours above 48 in individual weeks can be taken into account where the average across a regular cycle of no more than 17 weeks does not exceed 48 hours a week. Any unpaid rest weeks form part of that average.

The going rate calculation is different. It must reflect all weekly hours stated by the sponsor, including hours above 48. A worker sponsored for 60 hours against a published 37.5-hour going rate must therefore be paid the going rate adjusted to 60 hours, even though only salary relating to the first 48 hours can be counted towards the separate annual threshold.

These rules prevent sponsors from meeting the salary requirements through unusually long working weeks. A low hourly rate cannot be converted into a compliant annual salary simply by requiring the worker to complete more hours.

Check the reference hours for the occupation

The 37.5-hour basis applies to most occupation codes but not every role. Certain health and education occupations use national pay scales and may be based on a 40-hour week or another defined full-time working pattern.

Sponsors should check the notes attached to the relevant occupation code rather than applying 37.5 hours automatically. The correct calculation may depend on the applicable national pay scale, the worker’s pay band, the UK nation in which the role is based and the full-time hours prescribed for that role.

Particular care is required where a job title appears in more than one occupational or national pay table. The sponsor should identify the table that applies to the actual role and place of work before adjusting the salary for hours.

Common calculation errors

Errors commonly arise where sponsors:

• treat the published going rate as a fixed annual figure regardless of hours
• pro-rate the general salary threshold as though it were the going rate
• exclude routine contractual overtime from the sponsored hours
• include unpaid breaks in the weekly hours calculation
• use 37.5 hours for an occupation governed by a different reference week
• count salary earned above 48 hours towards the general annual threshold
• reduce the going rate for part-time hours without checking the separate salary floor

The calculation should be retained with the sponsorship record. A clear written record showing the published rate, reference hours, sponsored hours, applicable percentage and final minimum salary will be easier to defend than a salary figure that cannot later be reconstructed.

The Home Office is not confined to the figure stated on the Certificate of Sponsorship. Where the hours worked or salary paid differ from the sponsored arrangement, the issue may extend beyond a calculation error into inaccurate sponsorship information, underpayment and a failure to report a material change.

The current Rules confirm that most going rates are based on 37.5 hours and must be pro-rated to the hours stated by the sponsor. They also distinguish the 48-hour cap used for the general salary threshold from the requirement to adjust the occupational going rate against all sponsored hours.

Section C: What Counts as Salary?

Only specified forms of pay can be used to meet the Skilled Worker salary requirements. A remuneration package may be attractive in overall terms but still fall below the required threshold where part of its value consists of allowances, benefits, bonuses or reimbursement of costs.

Under Appendix Skilled Worker, salary normally includes guaranteed basic gross pay before deductions for income tax, employee National Insurance and employee pension contributions. Other guaranteed payments can count only where they are treated in exactly the same way as basic gross pay for tax, pension and National Insurance purposes.

The focus is therefore on guaranteed taxable pay for performing the sponsored role. The sponsor should be able to identify the qualifying salary from the employment contract, Certificate of Sponsorship, payslips and PAYE records without relying on the wider value of the employment package.

Payments that can normally be included

A payment should not be included merely because it is contractual or described as guaranteed. Its legal and payroll treatment must satisfy the Immigration Rules. Sponsors should obtain confirmation from payroll where the package contains separate pay elements and retain evidence explaining why any amount outside basic pay has been included.

Payments and benefits that cannot normally be included

The current Rules restrict qualifying salary to guaranteed basic gross pay and equivalent guaranteed payments, while expressly excluding overtime, bonuses, allowances, benefits in kind, immigration payments and business expenses.

The following should be excluded from the salary stated on the Certificate of Sponsorship:

• shift pay, overtime pay and bonus pay, even where payment is guaranteed
• pay that cannot be guaranteed because working hours fluctuate
• accommodation allowances and cost of living allowances
• employer pension contributions and employer National Insurance contributions
• company cars, private medical insurance, food and other benefits in kind
• equity awards and share options
• school or university fees
• one-off joining payments or “golden hellos”
• visa application fees, Immigration Health Surcharge payments and other immigration costs
• travel, subsistence, equipment, clothing and other business expense payments

Calling a payment “salary” in the contract does not determine how it will be treated. A housing payment remains an accommodation allowance, for example, even if it is paid through payroll each month. Overtime does not become basic salary simply because the employer expects the worker to complete it regularly.

Sponsors should be particularly cautious where the proposed salary sits only slightly above the applicable threshold. A package of £45,000 does not provide a qualifying salary of £45,000 if £3,000 relates to a guaranteed shift allowance or accommodation payment that must be excluded.

Guaranteed bonuses and overtime do not solve a salary shortfall

Older sponsorship practices sometimes treated guaranteed bonuses, shift premiums or contractual overtime as part of the worker’s qualifying salary. The current Skilled Worker Rules expressly exclude these forms of additional pay, regardless of whether the employer considers them certain to be paid.

A sponsor cannot therefore offer a basic salary below the required level and rely on an annual bonus to close the gap. The same applies where the worker is expected to earn enough through weekend work, night shifts or overtime to exceed the threshold over the year.

Additional payments can still be made to the worker. They simply cannot be relied on when establishing that the sponsored role satisfies the immigration salary requirements.

Allowances require particular care

Most allowances no longer count towards Skilled Worker salary. A narrow transitional provision remains available for certain workers who previously held Tier 2 (General) permission, continue to be sponsored by the same sponsor and apply before 1 December 2026. The allowance must be guaranteed, payable throughout the period of permission and equivalent to an allowance that would be paid to a settled worker in similar circumstances.

The transitional provision should not be applied to workers sponsored under the current salary framework or treated as a general exception for London weighting and other recurring allowances. Sponsors relying on it should record the worker’s immigration history, the continuity of sponsorship and the basis on which the allowance satisfies every condition.

The Certificate of Sponsorship must show qualifying salary

The gross salary entered on the Certificate of Sponsorship should exclude payments and benefits that cannot be counted. The figure must not represent the total value of the employment package or an “on-target earnings” amount.

Where the worker receives a £40,000 basic salary, a £4,000 discretionary bonus and private medical insurance worth £1,000, the salary recorded for immigration purposes is £40,000. Entering £45,000 would overstate the qualifying salary and could give the Home Office an inaccurate picture of the sponsored arrangement.

The salary description should also be consistent across the Certificate of Sponsorship, employment contract, offer letter and payroll system. Differences in terminology can create doubt about which payments are guaranteed, which are conditional and which were included in the immigration calculation.

Home Office compliance officers are likely to test the substance of each pay element rather than accept the label used by the sponsor. Payroll records should show that the qualifying salary is paid as guaranteed gross pay and does not depend on discretionary awards, additional working hours or benefits that cannot be counted.

Section D: Salary Must Be Paid in Practice

A compliant salary calculation at the point of sponsorship is not enough. The sponsor must continue to pay the worker at the required level throughout the period of sponsorship and should be able to demonstrate this through payroll, HMRC and banking records.

The Home Office does not have to accept the annual salary stated on the Certificate of Sponsorship at face value. Sponsor guidance confirms that HMRC data may be checked to establish whether sponsored workers are being paid appropriately. A mismatch between the sponsored salary and the amounts reported through PAYE can lead to further enquiries, a compliance visit or action against the licence.

Salary should be paid into the worker’s own bank account unless there is a legitimate and properly documented reason for another arrangement. Cash payments, payments to third parties and irregular transfers are more difficult to evidence and are likely to attract greater scrutiny where the payroll records do not provide a clear audit trail.

Check each pay period, not only the annual total

Annual salary remains relevant, but it is no longer safe to review sponsored pay only at year end. Current Skilled Worker guidance requires the worker’s salary in each pay period to meet the applicable going rate for the hours worked during that period.

Where salary is paid monthly or less frequently, the total paid over any three-month period must also reach at least one quarter of the required annual salary. A sponsor cannot routinely underpay for several months and rely on a later bonus, adjustment or year-end payment to correct the position.

A worker sponsored at £48,000 a year would ordinarily be expected to receive £4,000 gross each month. A payment of £3,200 in one month followed by £4,800 in the next may still require investigation, particularly where the difference reflects reduced basic pay rather than a genuine payroll timing issue.

The relevant question is not simply whether the worker received £48,000 across the tax year. The sponsor must be able to explain why each payment was correct for the hours worked and how any temporary discrepancy was identified and rectified.

Where the worker is paid more frequently than monthly, pay over any 12-week period must reach at least 12/52 of the required annual salary. Where regular hours vary from week to week and produce uneven pay, the sponsor must confirm the working pattern and salary over any 17-week period must reach at least 17/52 of the required annual salary.

Payroll errors should be corrected promptly

Administrative errors can occur, but recurring or prolonged underpayment is unlikely to be treated as a minor payroll issue. Sponsors should have a process for identifying discrepancies between the sponsored salary, contractual salary and actual gross pay before payroll is finalised.

Where an error is found, the sponsor should:

• calculate the precise shortfall
• make the corrective payment without delay
• record why the error occurred
• retain evidence of the correction
• consider whether the change or underpayment must be reported
• review whether other sponsored workers are affected

Back pay may help remedy a genuine isolated mistake, but it does not automatically remove the underlying compliance concern. The Home Office may still examine the duration of the underpayment, the sponsor’s systems and whether the worker was knowingly paid below the sponsored rate.

Hours and pay must remain aligned

Salary compliance can be lost where the worker’s hours increase but pay remains unchanged. A worker sponsored for 37.5 hours may cease to meet the adjusted going rate if they are routinely moved to a 45-hour schedule without a corresponding salary increase.

The same risk arises where the annual salary remains unchanged but the worker is required to complete unpaid additional hours. Contractual wording stating that extra hours may be required will not prevent scrutiny where rotas and timesheets show a regular working pattern materially above the hours declared on the Certificate of Sponsorship.

Sponsors should therefore monitor both pay and working time. Payroll data alone may show the correct annual salary while rota evidence shows that the hourly or adjusted going rate has fallen below the required level.

Reduced pay and unpaid absence

Temporary reductions in salary require careful handling. The Immigration Rules and sponsor guidance allow reduced pay in specified circumstances, including certain periods of statutory family leave, sick leave, assisting with a national or international humanitarian or environmental crisis and taking part in legally organised industrial action.

Outside the permitted exceptions, a reduction below the required salary level may require the sponsor to stop sponsoring the worker. A temporary commercial agreement, reduced-hours arrangement or voluntary pay cut does not override the immigration salary requirements.

Unpaid absence and reduced pay can also trigger reporting duties. Where a sponsored worker is absent without pay or receives reduced pay for more than four weeks in a calendar year, the sponsor must normally report the position unless an exception applies.

Retain evidence that explains the payment

Appendix D requires sponsors to retain payslips showing the worker’s name, National Insurance number, tax code, allowances and deductions. The sponsor should also retain evidence that the salary was paid, together with contracts, timesheets, rotas and records explaining any changes or corrections.

The records should reconcile. A Certificate of Sponsorship stating £50,000, a contract stating £46,000 plus bonus and PAYE records showing £3,833 a month creates an immediate question over which figure represents the worker’s guaranteed salary.

Home Office checks can test the sponsored salary against payroll records and HMRC data. Sponsors should therefore review sponsored salaries routinely rather than rely on explanations prepared only after a compliance concern has arisen.

Sponsors should therefore test sponsored salaries through routine payroll audits rather than waiting for a Home Office request.

The practical standard is straightforward: the worker should receive the qualifying salary promised on the Certificate of Sponsorship, at the correct rate for the hours worked and through a payment trail the sponsor can evidence without reconstruction.

Section E: How Deductions and Repayments Affect Sponsored Salary

The salary assessment does not end with the gross figure stated on the Certificate of Sponsorship. Appendix Skilled Worker requires specified payments made by the worker to the sponsor or a related organisation to be subtracted when determining whether the applicable salary requirements are met.

The rule applies where the worker is required to make:

• deductions from salary connected with business costs, immigration costs or investment in the sponsor or a related organisation
• repayments of loans connected with those costs or investments
• investments in the sponsor or a related organisation

The wording is targeted. It does not require every lawful deduction from gross or net pay to be subtracted. The nature, purpose and recipient of the payment determine how it should be treated.

Relevant amounts are averaged over the period for which the worker is being sponsored, as stated on the Certificate of Sponsorship. A large payment recovered over the first few months of employment can therefore reduce the annual salary assessment across the full sponsorship period.

How the salary subtraction is calculated

Consider a worker sponsored for three years at an annual salary of £42,000 who is required to repay a £9,000 immigration-related loan to the sponsor.

The repayment is averaged across the three-year sponsorship period:

£9,000 ÷ 3 years = £3,000 a year

The salary considered for immigration purposes would therefore be:

£42,000 − £3,000 = £39,000 a year

If the applicable salary threshold is above £39,000, the worker will not meet the requirement even though payroll records show a gross annual salary of £42,000.

The same method applies where the repayment is collected over a shorter period. Recovering the full £9,000 during the first year does not confine the immigration effect to that year. The amount is still averaged over the sponsorship period stated on the Certificate of Sponsorship.

Sponsors should therefore calculate salary both before and after applying every relevant payment. A repayment arrangement should not be implemented where the adjusted figure would fall below the applicable general salary threshold, going rate or other salary requirement.

Business costs

Deductions or loan repayments connected with the sponsor’s business costs fall within the salary subtraction rule. The category can include costs which the business would ordinarily incur in recruiting, employing, equipping or administering the worker.

The label used in the contract is not decisive. A payment described as an administration fee, compliance charge, recruitment repayment or training bond may still concern a business cost.

Sponsors should establish:

• what cost was actually incurred
• who incurred the cost
• why the worker is required to pay it
• who receives the payment
• whether the amount reflects the underlying cost
• how the payment affects the immigration salary calculation

A contractual right to recover a payment does not prevent it from being subtracted under the Immigration Rules.

Immigration costs

Payments relating to immigration costs require two separate checks. The sponsor must first establish whether the cost can lawfully be passed to the worker at all. It must then determine whether any permitted repayment to the sponsor or a related organisation reduces the worker’s salary for immigration purposes.

Appendix Skilled Worker also excludes payments relating to immigration costs, including the visa application fee and Immigration Health Surcharge, from the salary figure itself. Paying those costs for the worker does not allow the sponsor to add their value to the salary stated on the Certificate of Sponsorship.

The distinction matters. A cost may be contractually recoverable under employment law but still reduce the salary relied on for Skilled Worker purposes. Other costs, including the Immigration Skills Charge and specified sponsorship fees, must not be passed to the worker at all.

Loans and repayment agreements

A formal loan does not avoid the salary subtraction rule. Repayments must be subtracted where the loan relates to business costs, immigration costs or investment in the sponsor or a related organisation.

Relevant arrangements can include:

• visa fee loans
• Immigration Health Surcharge loans
• relocation advances, where the repayment relates to a business or immigration cost within the salary subtraction rules
• recruitment cost loans
• training cost loans, where the training represents a business cost within the salary subtraction rules
• payments described as deposits or advances which are connected with business costs, immigration costs or investment

The sponsor should not assume that repayment outside payroll falls beyond the rule. A standing order or separate bank transfer to the sponsor can have the same effect as a payslip deduction.

Clawback clauses should be itemised by cost. A single clause requiring repayment of all “immigration and sponsorship expenses” makes it difficult to distinguish between costs the sponsor must bear, costs that may be recoverable and payments that must be subtracted when salary is assessed.

The agreement should identify the actual cost, the repayment period, the recipient and the circumstances in which repayment becomes due. Excessive or unexplained sums are more difficult to defend as genuine reimbursement of a cost incurred.

Payments to related organisations

The rule is not limited to payments made directly to the licensed sponsor. It also covers relevant payments to a related organisation.

The sponsor’s review should therefore extend to arrangements involving:

• group companies
• parent or subsidiary businesses
• recruitment businesses connected with the sponsor
• director-owned companies
• associated service providers

Routing a repayment through another entity does not remove its effect where the payment concerns business costs, immigration costs or investment connected with the sponsor or its related organisation.

The relevant relationship and payment purpose should be documented. The sponsor should be able to explain why the worker is paying the other organisation and how it determined the immigration treatment.

Investments by the worker

An investment made by the worker in the sponsor or a related organisation must also be subtracted from salary. The rule prevents a sponsor from relying on a salary figure where the worker is simultaneously required to fund the sponsoring business.

Relevant arrangements may include required share purchases, capital contributions or payments presented as an investment in the business. The position should be checked even where the worker expects to receive an ownership interest or future return.

A voluntary investment should not be assumed to fall outside the rule merely because it is documented separately from the employment contract. Appendix Skilled Worker expressly identifies investments as a category to be subtracted.

Ordinary deductions that do not reduce immigration salary

Income tax and employee National Insurance do not reduce the worker’s gross salary for Skilled Worker purposes. Employee pension contributions deducted from gross pay also remain part of gross salary before the deduction is made.

Appendix Skilled Worker provides a further exception where the payment is not connected with business costs, immigration costs or investment, but instead concerns an additional benefit which the worker has a genuine choice to accept. A voluntary salary sacrifice arrangement may fall within this exception.

The worker’s choice must be genuine. A provision in the employment contract will not necessarily establish voluntariness where the arrangement was imposed as a condition of recruitment, sponsorship or continued employment.

The sponsor must also ensure that salary sacrifice and other deductions do not reduce pay below the National Minimum Wage. Compliance with the Skilled Worker salary rules does not displace the separate requirements of minimum wage legislation.

Record the effect on each pay period

A deduction may be averaged over the full sponsorship period for the purpose of the annual salary calculation while being collected over a much shorter period in practice. That can cause actual pay in individual pay periods to appear lower than the required level.

Where pay falls below the applicable pay-period requirements because relevant deductions are being collected over a shorter period, sponsor guidance requires the arrangement to be confirmed when the Certificate of Sponsorship is assigned. Where it arises after permission has been granted, it should be recorded in a change of circumstances notification.

The sponsor should retain:

• the underlying agreement
• evidence of the original cost or loan
• the repayment schedule
• the averaging calculation
• payroll records showing each deduction
• any required sponsor note or change notification

The legal calculation should be capable of being reconstructed from records held at the time. An explanation prepared only after the Home Office identifies a discrepancy will be less persuasive.

Practical sponsor position

Every payment required from a sponsored worker should be reviewed before the Certificate of Sponsorship is assigned or the arrangement is introduced. The sponsor should identify the purpose of the payment, the recipient, the period over which it will be recovered and its effect on the applicable salary requirements.

The central question is narrower than the worker’s final net pay. The sponsor must determine whether any part of the salary is being returned through a deduction, loan repayment or investment connected with business costs, immigration costs or the sponsoring organisation.

A compliant gross salary can become insufficient once the required subtraction is applied. Salary arrangements should therefore be approved by the sponsor licence team before payroll, finance or another connected organisation begins recovering money from the worker.

Section F: Sponsored Workers, Rent and Accommodation Charges

Accommodation provided by a sponsor, director or connected organisation requires careful review where the tenant is a sponsored worker. Providing housing is not in itself prohibited, but the arrangement should be genuine, commercially supportable and separate from the salary calculation used for sponsorship.

Risk arises where accommodation charges appear to return part of the worker’s sponsored salary to the sponsor or another connected party. The concern is strongest where a salary increase used to meet the immigration threshold is matched by a new rent obligation, service charge or other compulsory payment.

Appendix Skilled Worker does not state that every genuine rent payment must automatically be subtracted from salary. The legal treatment depends on the structure and purpose of the arrangement. A contrived or inflated charge may nevertheless provide evidence that the salary stated on the Certificate of Sponsorship does not reflect the worker’s genuine remuneration.

When accommodation arrangements create risk

Accommodation arrangements are more likely to attract Home Office scrutiny where:

• the worker is required to occupy sponsor-provided accommodation as a condition of sponsorship or employment
• the salary was increased at the same time as rent or another housing charge was introduced
• the rent is materially above the local market rate
• the worker must rent from a director, group company or connected property business
• the charge includes recruitment, sponsorship or administrative costs
• the worker has no realistic option to obtain alternative accommodation
• rent is deducted through payroll without a clear supporting agreement
• the sponsor cannot explain how the rent, deposit or service charge was calculated

No single factor will necessarily determine the immigration position. The Home Office may instead consider the arrangement as a whole, including its timing, commercial basis and connection with the salary needed to qualify for sponsorship.

A worker paid at or only marginally above the relevant threshold presents greater risk where a substantial proportion of that salary is then paid to the sponsor or a connected organisation under an accommodation arrangement. The sponsor should be able to show that the charge reflects genuine housing provided rather than a mechanism for recovering part of the wage.

Genuine commercial arrangements

A market-rate tenancy or licence which the worker has freely chosen is less likely to undermine the salary arrangement. The terms should be recorded separately from the employment contract and should be capable of justification by reference to the property, location, occupation terms and services provided.

The position is stronger where:

• the worker can decline the accommodation without affecting sponsorship or employment
• the rent is supported by local market comparisons
• the worker receives a clear tenancy or licence agreement
• deposits, utilities and service charges are separately identified
• the arrangement was not introduced to offset a salary increase
• payments are transparent and accurately recorded

A separate written agreement is useful but not conclusive. Contractual wording will carry limited weight where the worker had no meaningful choice or the financial terms cannot be commercially justified.

Payroll deductions and separate rent payments

Accommodation charges may be collected through payroll or paid separately by standing order or bank transfer. The method of payment does not determine whether the arrangement is compliant.

Where rent is deducted through payroll, the payslip should identify the amount and purpose clearly. Appendix D requires sponsors to retain payslips showing allowances and deductions, but the personnel file should also include the tenancy or licence agreement and evidence supporting the charge.

A separate payment outside payroll should not be treated as irrelevant. Where the recipient is the sponsor, a director or a connected organisation, the sponsor should be able to explain the relationship and show that the payment concerns genuine accommodation provided on defensible terms.

The position may be different where the worker rents from an unconnected third-party landlord and the employer merely facilitates payment as an administrative convenience. The arrangement should still be voluntary, documented and accurately reflected in payroll where a deduction is used.

Connected accommodation providers

Accommodation may be provided through a group company, director-owned property business or another organisation connected with the sponsor. The arrangement should be reviewed with the same care as housing provided directly by the licensed entity.

The sponsor should identify:

• who owns or controls the accommodation provider
• how the worker was introduced to the property
• whether occupation was compulsory
• how the rent was set
• where payments are made
• whether the sponsor or its officers receive a direct or indirect financial benefit

Routing rent through a separate organisation does not remove the need to explain the arrangement. Any connection between the sponsor, the property provider and the worker’s recruitment should be recorded transparently.

National Minimum Wage considerations

Accommodation arrangements can also affect National Minimum Wage compliance. Employer-provided accommodation is subject to the statutory accommodation offset rules, which operate separately from the Skilled Worker salary requirements. From April 2026, the accommodation offset is £11.10 a day or £77.70 a week.

A sponsor should therefore test the arrangement under both regimes. Compliance with the National Minimum Wage accommodation offset does not establish that the arrangement is acceptable for sponsorship purposes, while payment above the Skilled Worker threshold does not resolve a minimum wage breach.

Evidence sponsors should retain

Where accommodation is provided by the sponsor or a connected party, the sponsor should retain:

• the tenancy or licence agreement
• local rental comparisons
• details of property ownership or control
• evidence that the worker could decline the accommodation
• records of rent, deposits, service charges and utilities
• communications offering the accommodation
• proof of payments made by the worker
• the salary calculation in force when the arrangement was introduced

The records should show that the accommodation was offered on genuine commercial terms and was not used to make an otherwise insufficient salary appear compliant.

Practical sponsor position

Sponsors providing accommodation should assess the arrangement before the worker signs the agreement or begins making payments. Rent should be supportable, the worker’s choice should be genuine and the terms should not be designed to recover salary needed to satisfy the Immigration Rules.

The relevant question is not simply whether the gross figure on the payslip meets the threshold. The sponsor should be able to explain why the worker is paying for the accommodation, how the charge was calculated and why the arrangement remains independent of the sponsored salary.

Section G: Salary Practices Sponsors Should Avoid

Salary compliance problems often arise where the figures entered on the Certificate of Sponsorship do not match the role, working pattern or financial arrangement operating in practice. Sponsors should treat the following practices as clear compliance warnings.

Do not understate working hours

The weekly hours stated on the Certificate of Sponsorship should reflect the hours the worker is genuinely expected to work. Recording 37.5 hours where contracts, rotas or operational practice require a materially longer week can result in the going rate being calculated on the wrong basis. Generic clauses requiring “reasonable additional hours” will not resolve a regular mismatch between sponsored and actual hours.

Do not rely on bonuses, overtime or allowances

The worker’s qualifying basic salary must meet the applicable immigration requirements without relying on excluded payments. Bonuses, shift premiums, overtime and most allowances should not be used to fill a shortfall, even where the sponsor expects them to be paid regularly. The salary recorded for sponsorship should remain compliant during periods when no additional payment is made.

Do not increase salary and recover the difference

A salary increase used to meet the immigration threshold should not be matched by a compulsory loan repayment, inflated rent, service charge or other payment to the sponsor or a connected organisation. Depending on its structure and purpose, the payment may reduce the salary assessment or provide evidence that the stated remuneration does not reflect the genuine arrangement.

Do not pass prohibited sponsorship costs to the worker

The Immigration Skills Charge and specified sponsor licence and Certificate of Sponsorship costs must be borne by the sponsor. Recovery through payroll, a separate agreement, a recruitment charge or a loan does not make the practice compliant. Repayment clauses should identify each cost separately so that prohibited sponsor costs are not grouped with worker-specific immigration expenses.

Do not route repayments through connected organisations

Payments to a group company, director-owned business, recruitment provider or other related organisation may still be relevant to the salary assessment. Routing a charge through another entity does not remove the compliance concern where the worker is effectively returning money connected with business costs, immigration costs or investment in the sponsoring organisation.

Do not rely on contractual labels

Describing a payment as voluntary, commercial or separate from employment will not determine its treatment. The Home Office may examine whether the worker had a genuine choice, whether the amount reflects an actual cost and whether sponsorship or continued employment depended on accepting the arrangement. The practical operation of the payment is likely to carry more weight than its contractual description.

Do not allow payroll and sponsorship records to diverge

The Certificate of Sponsorship, employment contract, payroll records and HMRC reporting should support the same salary and working pattern. A higher figure on the CoS than in the contract, routine hours above those declared or deductions without supporting documents can each indicate that the sponsored arrangement is inaccurate or poorly controlled.

Do not delay correcting underpayment

A retrospective salary increase or lump-sum payment will not necessarily remove an earlier breach. Where an error is identified, the sponsor should quantify the shortfall, correct payment promptly, preserve the evidence and check whether the same issue affects other sponsored workers. Delayed action can suggest that the sponsor lacked effective systems or knowingly allowed the problem to continue.

Do not treat salary compliance as an HR-only issue

Changes made by payroll, finance or operational managers can alter the immigration position without changing the employment contract. New deductions, revised hours, salary sacrifice, cost recovery and accommodation arrangements should all be referred to the sponsor licence team before implementation.

The safest position is one in which the role, hours, salary and associated payments were set for genuine commercial reasons and can be evidenced consistently without relying on explanations created after scrutiny begins.

Section H: What the Home Office Checks

A Home Office salary review will not usually be confined to the figure stated on the Certificate of Sponsorship. Compliance officers may compare sponsorship records with employment documents, payroll, HMRC data, working time evidence and information obtained directly from the worker and relevant staff.

Appendix D requires sponsors to retain specified salary and employment records, while sponsor guidance allows the Home Office to use HMRC information and compliance checks to test whether sponsored workers are being paid appropriately.

The records should support one coherent account of the role, hours, salary and associated payments. Compliance risk increases where the sponsor must reconcile conflicting figures or rely on explanations that were not documented when the arrangement was introduced.

The practical test is whether a compliance officer can follow the sponsored salary from the Certificate of Sponsorship through the contract, payroll and the worker’s bank account, while also accounting for hours worked, deductions and any payments made to the sponsor or a related organisation.

Section I: Salary Changes and Sponsor Reporting

A sponsored worker’s pay and working hours may change during employment, but the sponsor cannot treat every contractual variation as an internal HR matter. The revised arrangement must remain compliant with the Immigration Rules and may need to be reported through the Sponsorship Management System.

Specified changes must generally be reported within 10 working days. A failure to report can amount to a separate sponsor duty breach even where the revised salary remains above the relevant threshold. The sponsor should therefore check the immigration position before any salary or hours change takes effect.

Salary increases

A routine salary increase will not normally require the worker to make a new Skilled Worker application where they remain employed by the same sponsor in the same occupation code and sponsored role.

The sponsor should update its internal records, employment documents, payroll and HMRC reporting to reflect the increase. Salary increases do not generally have to be reported through the Sponsorship Management System, except in specified circumstances, including where a sponsored pre-registration nurse or midwife completes professional registration.

Particular care is required where a substantial increase is introduced shortly before an extension or settlement application. The Home Office may examine the timing and scale of the increase, the commercial reason for it, how long the worker has received the higher salary and whether the sponsor’s business can sustain the revised level of pay.

The sponsor should retain:

• the revised contract or salary variation letter
• the business reason for the increase
• details of any promotion or additional responsibility
• updated payroll and HMRC records
• evidence that comparable roles are paid consistently

A salary increase should be genuine and operating in practice before it is relied on for an immigration application. Increasing pay on paper while recovering the difference through rent, deductions, loans or other payments can expose the sponsor to wider compliance action.

Permitted salary reductions under the existing permission

A sponsor may reduce a Skilled Worker’s salary without assigning a new Certificate of Sponsorship or requiring a new application only in defined circumstances.

The principal exception applies where, after the reduction, the worker would continue to score 20 tradeable points under the same salary option which led to their current grant of permission. A worker granted permission under Option B, for example, must continue to satisfy every requirement of Option B after the reduction. The sponsor cannot rely on a different salary option merely because it would accommodate the lower pay.

Separate provisions apply to certain workers granted permission under earlier transitional arrangements. A reduction may be permitted where the worker would continue to satisfy the relevant transitional salary requirements as they applied when permission was granted.

A reduction may also be permitted where it coincides with a temporary reduction in hours or a phased return to work for individual health reasons, provided:

• the arrangement is supported by an occupational health assessment
• the applicable hourly rate does not fall below the hourly requirement which applied when the worker obtained their current permission

Temporary reduced pay can also be permitted during specified absences, including statutory family leave, sick leave, jury service, attendance at court as a witness, legally organised industrial action and approved work connected with a national or international humanitarian or environmental crisis.

Even where a salary reduction is permitted without a new application, the sponsor must report the change through the Sponsorship Management System within 10 working days and state the worker’s revised salary. The sponsor should also retain the recalculation and evidence showing why the reduction falls within the relevant exception.

Reductions requiring a new application or cessation of sponsorship

Where none of the permitted exceptions applies, the sponsor cannot reduce the worker’s pay and continue sponsorship under the existing permission.

If the revised salary would qualify under a different Skilled Worker salary option, the sponsor must assign a new Certificate of Sponsorship and the worker must make a successful application for permission before the lower salary is implemented.

For example, a worker granted permission under one salary option cannot simply move to a lower rate available under another option because their circumstances have changed. The new option must be assessed through a fresh application before the sponsor starts paying the reduced salary.

If the proposed salary would not meet the requirements of any available Skilled Worker salary option, the sponsor must not implement the reduction while continuing sponsorship. It will need to stop sponsoring the worker and report this through the Sponsorship Management System.

The sequence is important. The sponsor must:

• calculate the revised salary against the worker’s existing salary option
• determine whether an express exception permits the reduction
• assess whether a different salary option could apply through a new application
• assign a new Certificate of Sponsorship where required
• wait for the worker’s application to be granted before reducing pay

A sponsor should never reduce salary first and attempt to regularise the position afterwards. Current sponsor guidance states that where a reduction is not permitted under the existing permission, the worker must make a successful application before the sponsor starts paying the reduced rate. Where the revised salary does not qualify at all, sponsorship must end.

Changes to working hours

A change in weekly hours requires a fresh salary calculation. An increase in hours can raise the adjusted occupational going rate, while a reduction may lower the going rate but leave the separate annual salary threshold unchanged.

Moving a worker from 37.5 to 45 hours without increasing salary may therefore result in underpayment against the going rate. Moving the worker to part-time hours may produce a compliant pro-rated going rate but still fail the applicable general salary threshold.

The sponsor should not amend a rota or approve a flexible working request for a sponsored worker until the immigration calculation has been checked. Operational managers should refer proposed changes in hours to the sponsor licence team before implementation.

Promotions and changes in duties

A promotion does not automatically require a new Skilled Worker application. The position depends on whether the revised role remains within the occupation code under which the worker was sponsored.

Where the new role remains within the same occupation code and continues to meet the salary requirements, a new application may not be required, although the change may still need to be reported. A material change in duties which moves the role into a different occupation code will normally require a new Certificate of Sponsorship and a successful change of employment application before the worker starts the new role.

Changing the job title alone is not decisive. The sponsor should compare the old and new duties, required skills, seniority and working arrangements before deciding that the existing occupation code remains appropriate.

Changes to deductions or salary sacrifice

New deductions can affect salary compliance even where gross basic pay remains unchanged. Payroll should not introduce a loan repayment, accommodation deduction, salary sacrifice arrangement or cost-recovery deduction without immigration review.

The sponsor should consider:

• whether the payment must be subtracted under Appendix Skilled Worker
• whether the worker has a genuine choice
• whether the payment relates to business or immigration costs
• whether the recipient is the sponsor or a related organisation
• whether the adjusted salary continues to meet every applicable threshold

A deduction that appears modest each month may have a material effect when averaged across the full sponsorship period.

Introduce a salary change control

The safest approach is to prevent any change affecting a sponsored worker’s pay or hours from taking effect until it has passed a formal immigration check.

The approval process should cover:

• salary increases and reductions
• changes in weekly hours
• promotions and revised duties
• new allowances or removal of existing payments
• salary sacrifice
• unpaid leave and reduced pay
• loan, rent and cost-recovery deductions
• changes in work location or employing entity

The sponsor licence team should record the calculation, reporting decision and supporting evidence. Payroll, HR and operational managers should implement only the approved arrangement.

Salary compliance is most vulnerable when changes are made outside the sponsorship process. An otherwise compliant package can become non-compliant through an ordinary payroll instruction, rota change or contractual variation if no one checks the immigration consequences before it takes effect.

Section J: Sponsored Salary Compliance Check

Sponsors should review sponsored salaries periodically rather than relying on the calculation completed when the Certificate of Sponsorship was assigned. The purpose is to confirm that the role remains correctly sponsored, the required salary is still being paid and no subsequent change has created a compliance breach.

Start by verifying the worker’s occupation code and the salary option relied on. The duties performed in practice should remain consistent with the selected code and the worker must continue to satisfy any conditions attached to a discounted or transitional salary option.

The occupational going rate should then be recalculated against the worker’s actual weekly hours. Contractual hours, rotas and timesheets should be compared to identify regular additional hours that were not reflected in the original calculation. A salary that met the going rate for 37.5 hours may no longer qualify where the worker routinely works a longer week.

The Certificate of Sponsorship, employment contract and payroll records should show the same basic salary and working pattern. Sponsors should examine gross pay in each pay period rather than relying only on the annual total. Late payments, temporary shortfalls, unpaid absence and retrospective adjustments should be identified and explained.

Each element of the remuneration package should also be reviewed. Allowances, bonuses, overtime and benefits should not be included unless they qualify under the applicable Immigration Rules. Salary sacrifice arrangements and all deductions should be checked for their effect on the immigration salary calculation.

The review should extend beyond the payslip. Sponsors need to identify payments made by the worker to the sponsor or a related organisation, including loan repayments, rent, accommodation charges and immigration cost clawbacks. Particular attention should be given to arrangements which return part of the stated salary to the sponsor or recover costs the sponsor is required to bear.

Payroll data should be reconciled with HMRC reporting and evidence that the salary reached the worker’s account. Appendix D requires sponsors to retain salary evidence, including payslips showing allowances and deductions.

Any change to salary, hours, duties or payment arrangements should be checked against the sponsor reporting requirements. Current sponsor guidance requires specified changes to be reported within the relevant deadline and permits compliance action where sponsor duties are breached.

A discrepancy affecting one worker may indicate a wider systems failure. Sponsors should therefore establish whether the same payroll treatment, contract wording or repayment arrangement applies across the sponsored workforce and take corrective action promptly.

For a more detailed review process, see our sponsored worker salary audit checklist, covering CoS data, payroll, working hours, deductions, accommodation arrangements and supporting records.

Need Advice on Sponsored Worker Salary Compliance?

Salary errors can expose a sponsor to more than an individual visa refusal. Where the Home Office identifies underpayment, inaccurate CoS information, prohibited cost recovery or an artificial remuneration arrangement, the consequences can extend to licence suspension, downgrading or revocation.

DavidsonMorris’ immigration solicitors advise employers on sponsored worker salary calculations, payroll and contract reviews, deductions, immigration cost clawbacks and accommodation arrangements. We can also support with corrective action where an existing arrangement may no longer comply with the current Immigration Rules.

For advice on a specific salary structure or sponsored worker payment issue, book a fixed-fee telephone consultation.

Sponsored Worker Salary Calculation FAQs

Does a sponsored worker only need to meet the annual salary threshold?

No. The worker must meet the applicable general salary threshold and the required percentage of the going rate for the relevant occupation code. The going rate must usually be adjusted to reflect the weekly hours stated on the Certificate of Sponsorship. The higher resulting requirement will determine the minimum salary payable.

Can a sponsor pro-rate the Skilled Worker salary threshold for part-time hours?

The occupational going rate can generally be pro-rated to the worker’s sponsored weekly hours. The separate general annual salary threshold is not normally reduced merely because the worker works part-time. A role may therefore meet the adjusted going rate but still fail because the annual salary is below the minimum required under the relevant salary option.

Can bonuses, overtime or allowances count towards sponsored salary?

Guaranteed basic gross pay is the principal amount that can be counted. Bonus pay, overtime pay, shift pay, benefits in kind and most allowances cannot generally be used to meet the Skilled Worker salary requirements, even where the sponsor expects the worker to receive them. A narrow transitional exception can apply to specified allowances for certain workers sponsored under earlier arrangements.

Can a sponsored worker repay visa or sponsorship costs?

The treatment depends on the cost. Sponsors must not pass on costs they are required to bear, including the Immigration Skills Charge and specified sponsor licence and Certificate of Sponsorship costs. Repayment of other immigration expenses may be possible under a properly drafted agreement, but relevant payments made to the sponsor or a related organisation may have to be subtracted when the worker’s salary is assessed.

Does rent paid to the sponsor reduce the worker’s immigration salary?

Not every genuine rental payment will automatically be deducted from salary. The arrangement requires careful review where accommodation is provided by the sponsor or a connected party, particularly if occupation is compulsory, the rent is inflated or the salary was increased alongside the rental charge. An arrangement designed to return part of the sponsored salary to the sponsor can create serious licence risk.

Can a worker’s salary be increased shortly before a visa extension or settlement application?

A genuine salary increase can be relied on, but the Home Office may examine its timing, scale and commercial basis. Sponsors should retain evidence showing when the increase took effect, why it was awarded, how it compares with pay for similar roles and that the higher salary is genuinely being paid through payroll.

What happens if payroll underpays a sponsored worker?

The sponsor should identify the shortfall, make the corrective payment promptly and investigate why the error occurred. A retrospective payment does not necessarily remove the original compliance issue, particularly where underpayment was repeated or continued over several pay periods. The sponsor should also consider whether the matter must be reported and whether other sponsored workers are affected.

Can salary above 48 hours a week be counted?

Pay attributable to hours above 48 each week cannot normally be used to meet the general annual salary threshold. An exception can apply where hours vary under a regular working cycle of no more than 17 weeks and average no more than 48 hours a week across that cycle. The occupational going rate must still be calculated against all sponsored weekly hours.

How does the Home Office check sponsored worker salary?

The Home Office can compare the Certificate of Sponsorship with employment contracts, payslips, HMRC PAYE information, bank payments, rotas, timesheets and records of deductions or repayments. It may also interview the worker, payroll personnel and operational managers to establish how the arrangement operates in practice.

Do salary changes have to be reported?

Salary reductions from the level stated on the Certificate of Sponsorship must generally be reported within 10 working days, even where the reduction is permitted under the worker’s existing immigration permission. Salary increases do not normally need to be reported, except in specified cases. Changes to duties, occupation code, working location or other material employment circumstances may also trigger reporting requirements or require a new application.

Glossary

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