The Home Office’s recent overhaul of the sponsor licence renewal system marks a significant shift in how UK businesses manage their ability to sponsor skilled foreign workers. Effective from 6 April 2024, sponsorship licences expiring on or after this date will automatically be extended for a decade. This transformative change has streamlined the process for many sponsors, but it raises critical questions about compliance, preparation, and risk management.
This article unpacks the implications of these new rules, examines the traditional renewal process for licences expiring before April 2024, and offers essential insights to help businesses ensure compliance.
The New Era of Sponsor Licence Renewals
For sponsor licences with expiry dates on or after 6 April 2024, the Home Office has eliminated the requirement for sponsors to manually renew their licence. Instead, these licences will automatically be extended for 10 years unless the sponsoring organisation applies to withdraw the licence. The Sponsorship Management System (SMS) has also been updated, removing the renewal menu option for these cases.
This development relieves sponsors of an administrative burden that has historically required meticulous preparation and strict adherence to deadlines. However, compliance duties remain paramount. Automatic renewal does not exempt sponsors from fulfilling their obligations under the UK’s immigration laws.
Renewing Licences Expiring Before 6 April 2024
For licences expiring before the rules change, the traditional renewal process remains in effect. Sponsor licences are valid for four years, and failure to renew on time can have severe consequences, including losing the ability to sponsor foreign workers and the curtailment of sponsored employees’ visas.
Key Steps in the Renewal Process
- Check Your Expiry Date: The SMS portal displays the licence’s expiry date. Diarise this and share it with key personnel to avoid missing deadlines.
- Submit Your Application: UK Visas and Immigration (UKVI) allows renewal applications to be submitted up to three months before expiry. A Level 1 user must log into the SMS, pay the appropriate fee, and complete the renewal declaration.
- Home Office Compliance: UKVI may conduct a compliance audit before granting a renewal. This audit assesses HR systems, personnel records, and the sponsor’s adherence to reporting duties. A pre-renewal inspection is more likely if no compliance visit has occurred within the last four years.
- Processing Times: A decision on renewal applications typically takes eight weeks, though this can extend if additional documentation or an inspection is required. Provided the application is submitted before expiry, the licence is temporarily extended during the review period.
Compliance Duties: The Heart of Sponsorship
Whether operating under the new automatic extension system or the traditional renewal process, compliance is non-negotiable. Sponsors must:
- Maintain Accurate Records: Keep documentation for all sponsored workers, including evidence of right-to-work checks and job roles.
- Report Changes Promptly: Notify UKVI of changes to company structure, key personnel, or sponsored workers’ employment status.
- Pass Compliance Audits: Be prepared for unannounced Home Office visits and ensure HR processes meet the required standards.
Failure to meet these obligations can lead to downgrading, suspension, or even revocation of a licence, jeopardising the organisation’s ability to sponsor workers.
Risks of Non-Renewal
An expired licence leaves organisations unable to sponsor new workers or employ existing sponsored employees lawfully. For the latter, their visas may be curtailed, leaving them just 60 days to find alternative sponsorship or leave the UK. The ripple effect on businesses can be catastrophic, impacting operations, reputation, and workforce morale.
If a renewal application is refused, organisations may seek an administrative review or judicial review in certain circumstances. Alternatively, they may need to apply for a new licence, often incurring additional costs and potential operational delays.
The Financial Implications
The cost of renewing a sponsor licence depends on the organisation’s size and charitable status:
| Licence Type | Small/Charitable Fee | Medium/Large Fee |
| Worker | £536 | £1,476 |
| Temporary Worker | £536 | £536 |
| Worker and Temporary Worker | £536 | £1,476 |
A small business is defined as one with no more than 50 employees, an annual turnover of £10.2 million, and a balance sheet total of no more than £5.1 million.
Preparing for Renewals and Compliance Visits
Preparation is crucial for smooth renewals, particularly under the traditional system:
- Start Early: Begin preparing six months before expiry to identify and rectify compliance gaps.
- Conduct an Internal Audit: Review HR systems, right-to-work records, and sponsorship reports.
- Stay Updated: Ensure familiarity with the latest Home Office guidance.
- Document Readiness: Have all required documents readily available in case of a compliance visit.
A Cautionary Note: Automatic Renewal Isn’t a Free Pass
While the 10-year automatic extension may seem like a relief, sponsors must remain vigilant. Compliance obligations remain unchanged, and the Home Office retains the authority to inspect and penalise organisations failing to meet their duties.
Final Takes
The Home Office’s revised rules mark a milestone in simplifying sponsor licence management for many UK employers. However, the emphasis on compliance remains as strong as ever. For licences expiring before April 2024, businesses must adhere to the traditional renewal process. Meanwhile, organisations benefitting from the automatic extension must continue to prioritise their compliance to avoid serious repercussions.
If your organisation needs assistance navigating the complexities of sponsor licence renewal, compliance, or audits, seeking professional advice can be invaluable. With the stakes so high, proactive planning is essential to safeguard your ability to sponsor foreign workers and drive business success.
Get in touch: For a comprehensive understanding of your options or queries on UK immigration matters, contact GigaLegal Solicitors at 02074067654 or click here to book a no-obligation consultation with an immigration expert.