UK proposes tax relief for two sponsorship charges

The narrow exemption announced

HMRC’s 28 October 2026 policy note proposes an Income Tax exemption for an employer’s payment of the Immigration Skills Charge and Certificate of Sponsorship fee for a Skilled Worker employee or prospective employee. It is intended to apply to payments made on or after 28 October. The note says legislation will be introduced in a future Finance Bill. Official source.

Two charges, not the whole relocation bill

The stated scope excludes sponsor-licence fees, visa application fees, the Immigration Health Surcharge and other immigration costs. The proposal would apply whether employment has begun and whether the later visa application succeeds. HMRC also explains the intended corresponding Class 1A National Insurance treatment; it is not announcing a general tax exemption for relocation.

Payment responsibility remains important

HMRC describes the two covered sponsorship charges as mandatory employer costs that cannot be recovered from the sponsored worker. The publication record identifies the measure and its official tax note. Tax treatment and lawful allocation of sponsorship costs should be checked separately in any employment arrangement.

A useful payroll exercise

Separate every line of the immigration invoice by its exact purpose, payer and payment date. Ask payroll advisers which current reporting treatment is appropriate while legislation and guidance develop. A combined amount labelled “visa package” conceals the distinction that the proposal depends on and makes subsequent reconciliation harder.

Hypothetical example

An employer pays a Certificate of Sponsorship fee, a visa application charge and a health surcharge on the same day. The announced exemption should not be applied to the whole payment simply because all three relate to the same recruit. A breakdown allows the employer to consider each item under the relevant tax and sponsorship rules.

No change to immigration eligibility

The tax proposal does not waive a charge, issue a visa or establish that the sponsored role qualifies. Employers should retain payment evidence and the applicable policy version, and check final legislation before drawing conclusions about a particular reporting position. Applicants should not interpret the announcement as a promise that every immigration expense will be reimbursed or tax free.

Legal check date

Sources and law checked on 29 October 2026. Later developments are not reflected automatically. Application of the rules depends on the individual facts.