The Spring Budget 2025, delivered against the backdrop of a challenging economic climate and an approaching General Election, set the tone for continued fiscal restraint and a firm stance on immigration. While headline-grabbing tax cuts and investment announcements dominated the news cycle, several key developments – both direct and indirect – will significantly affect UK employers who rely on international workers.
This blog explores the immigration-related announcements from the Budget and assesses what they mean for businesses using the sponsorship system.
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Increase in Visa Fees and Immigration Health Surcharge
One of the most notable confirmations in the Spring Budget was the full implementation of the previously proposed increases to visa application fees and the Immigration Health Surcharge (IHS), set to take effect from April 2025.
Fee Increases at a Glance:
- Skilled Worker visa (3+ years): now over £1,400 per applicant
- Certificate of Sponsorship (CoS): remains at £239, but payable per job offer
- Immigration Health Surcharge: rising to £1,135 per year per adult
- Dependent family members are also charged separately — meaning a three-year visa for a worker with a partner and one child now exceeds £10,000 in combined costs.
Implications for Employers:
For businesses acting as sponsors, these increases materially raise the total cost of hiring overseas workers. Employers who cover visa fees as part of recruitment packages will see significant budgetary pressure—particularly in sectors where roles fall at or just above the minimum salary threshold (such as care, retail, hospitality, and some entry-level tech or logistics roles).
Where employers require staff to fund their own applications, there is a risk of reducing the attractiveness of UK roles compared to other global markets. In turn, this could negatively impact the quality and diversity of applicants.
There is also growing concern among SMEs and care providers that the high costs will deter essential overseas workers from applying, leading to unfilled vacancies and added pressure on service delivery.
Recommendation: Employers should conduct a full cost analysis of sponsored recruitment across the lifecycle of a visa. Consider revising internal policies around fee reimbursements, clawback clauses, and contractual retention mechanisms to manage risk and retention.
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Enhanced Labour Market Enforcement Funding
The Chancellor allocated £75 million in new funding over the next two years to strengthen labour market enforcement. This includes increased staffing and coordination across the Home Office, HMRC, and the Gangmasters and Labour Abuse Authority (GLAA), with a focus on illegal working, fraudulent visa use, and abuse within the sponsorship system.
This announcement follows a recent uptick in enforcement activity, including surprise Home Office audits and civil penalties issued for sponsor non-compliance.
Implications for Employers:
This signals a clear shift towards tougher enforcement. Sponsor licence holders can expect more frequent compliance visits, especially in sectors previously flagged as vulnerable to exploitation (e.g. care, cleaning, hospitality, warehousing, construction).
The enforcement drive will focus on:
- Proper assignment and use of Certificates of Sponsorship
- Accuracy of job descriptions and salary levels
- Monitoring visa expiry dates and right-to-work checks
- Reporting of absences, job changes, and contract terminations
- Record-keeping and responsiveness to Home Office requests
Even unintentional errors could result in downgrading, suspension, or revocation of a licence, disrupting the ability to employ key staff and potentially triggering reputational harm.
Recommendation: Employers should conduct an internal compliance health check and audit their HR systems, ensuring robust processes are in place for monitoring sponsored workers. Regular training for HR and line managers is essential, as is having clear escalation procedures for reporting to the Home Office.
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Sector-Specific Recruitment Support
While there were no new announcements on the Shortage Occupation List (SOL), the Budget outlined a broader commitment to supporting recruitment in shortage areas—specifically adult social care, logistics, and construction—through streamlined sponsorship pathways and collaborative government-industry working groups.
Although the detail remains light, it is likely that further refinements to job codes, minimum salary thresholds, or fast-track routes will be introduced over the coming months.
Implications for Employers:
For businesses operating in shortage areas, there may be some relief through faster visa processing or lower salary thresholds. However, this must be balanced against increased compliance scrutiny and high sponsorship costs. Furthermore, changes to SOL designations are politically sensitive and may be temporary or subject to rapid revision.
Recommendation: Employers in shortage sectors should work closely with legal advisors to monitor upcoming changes to the Immigration Rules. Strategic workforce planning and timely recruitment decisions will be key to taking advantage of any temporary concessions.
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Greater Emphasis on Domestic Workforce Upskilling
The Budget earmarked over £110 million to support domestic skills initiatives, including training for roles traditionally filled by sponsored workers (particularly in care and hospitality). Government ministers reiterated their aim to reduce “reliance on migration” by prioritising UK-based workers.
Implications for Employers:
While there are no immediate policy changes, the direction of travel is clear. We can expect the Government to continue tightening access to lower-skilled roles, either by increasing salary thresholds or limiting visa durations.
Recommendation: Employers relying on sponsorship for medium-skilled roles should take a long-term view of recruitment, exploring how a mix of domestic recruitment, training pipelines, and overseas sponsorship may meet their evolving workforce needs.
Conclusion
The Spring Budget 2025 reinforces the Government’s position: sponsorship remains possible, but comes with rising costs, enhanced scrutiny, and greater complexity. Employers must not only budget accordingly but ensure that their compliance infrastructure is robust and future-proof.
In a climate of increasing enforcement and cost pressure, placing an experienced immigration legal team on retainer has never been more valuable.
Ison Harrison’s Business Immigration team offers proactive, commercially focused support to help employers manage immigration risk and build a global workforce with confidence. Call us today on 0113 284 5000.
