On 06 April 2025, the new size classifications for companies in the UK came into force. This will have an effect on company reporting duties, auditing and the amount that companies will pay for a sponsor licence application, as well as the Immigration Skills Charge (ISC).
What has changed?
The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 has increased the financial size thresholds for companies. The Home Office rely on the size of companies, as defined by statute, when determining a number of different fees for organisations that hold a sponsor licence.
Organisations will now be classified as micro, small, and medium-sized companies, as well as large companies. This should allow a number of organisations to now be classified as small, rather medium or large companies, and, therefore, benefit from paying a reduced fee for the ISC.
Definition and fees
The recently updated Part 2 of the sponsor guidance sets out that:
“S5.3. If you are a small or charitable sponsor, as defined in regulation 2 of the Immigration Skills Charge Regulations, you will pay the ‘small’ charge:
- £364 for any stated period of employment up to 12 months
- an additional £182 for each subsequent 6-month period stated on the CoS
S5.4. In all other cases, you must pay the ‘large’ charge:
- £1,000 for any stated period of employment up to 12 months
- an additional £500 for each subsequent 6-month period stated on the CoS
S5.5. When you apply for a licence, it is essential that you select the correct size or type for your organisation, as this will determine not only the licence fee you will pay, but also the level of Immigration Skills Charge you will pay throughout the life of your licence, or until you tell us of a change of circumstances through the sponsorship management system (SMS) and this has been processed and accepted by UKVI.”
Previously, to be considered a small company, two out of the three below criteria would have to be met within the same financial year. The company would need to have:
- a turnover of not more than £10.2 million;
- a balance sheet total of not more than £5.1 million;
- no more than 50 employees.
Now, to be classified as a small company, two out of the three below criteria must be met in the same financial year:
- a turnover of not more than £15 million;
- a balance sheet total of not more than £7.5 million;
- no more than 50 employees.
This means that a company with over 50 employees and a turnover of £11 million, for instance, is no longer classified as a large company. They can, therefore, benefit from the lower Immigration Skills Charge of £364 per year of sponsorship (as opposed to £1,000 per year of sponsorship). This could lead to significant savings, depending on the size and business needs of the organisation.
Why has this changed?
This is the first change in company size thresholds since 2013, and these amendments hope to encompass the last 12 years of significant changes to the economy, such as inflation and the impact of movements such as Brexit.
These changes aim to simplify the reporting onus for companies. This lighter touch approach should hopefully decrease the amount of reporting and auditing that companies have to do (for example, the Directors Report).
It is also important to note that the employee number is still (less than or equal to) 50 for small companies.
How these changes may affect your business
It is thought that a huge number of companies will now qualify under a smaller size category. This means that audit requirements and company reports will be reduced accordingly. The previous Conservative government’s Non-financial reporting review: impact assessment and the current Labour government’s Non-financial reporting review: simpler corporate reporting explained the impact of reclassification. It was stated that:
“5,000 large companies will be reclassified as medium-sized companies and access more proportionate reporting, 14,000 medium-sized companies would be reclassified as small companies, and 113,000 small companies would be reclassified as micro-sized companies which will allow them to file simpler accounts.”
A transitionary period regarding accounting has been implemented, as well as the existing duty for licenced sponsors to make a report within 20 working days regarding a change in company size classification.
If you require assistance in navigating these changes from a business immigration perspective, we can assist with potentially saving your business money when applying for a sponsor licence or paying the ISC.
How our Immigration Solicitors can help
Our immigration experts are able to provide advice and guidance in relation to sponsor licence guidance, duties & compliance, ILR, Global Talent or Naturalisation applications, and education matters. If you require legal assistance in an immigration matter, or if you would like to discuss your situation with a member of our team, please contact us or complete our enquiry form below.
Here, at Carter Thomas Solicitors, we are highly experienced in providing compliance reviews and mock UKVI audits, as well as Right to Work training.
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