New Rules on Calculating Salaries for Skilled Worker Visa Holders – Associated Impact on Loan Agreements

This cost doubles when the employee is applying for a visa for their dependant partner and increases further if they have children requiring dependant visas too and where the priority service is required.  It is therefore common, but not mandatory, for employers to assist their employee with these costs.

Financial support to employees is usually given by way of a loan which is either repayable in certain circumstances e.g. when employment terminates or repaid monthly as a deduction from pay. Previously these arrangements have had no bearing on the employee’s eligibility for sponsorship however this is no longer the case.

Under new immigration rules announced on 12 March 2025 and effective for Certificates of Sponsorship (CoS) assigned on or after 9 April 2025, the following payments will be deducted when calculating whether a Skilled Worker’s pay meets the applicable salary thresholds:

• Deductions from the worker’s salary;
• Repayments of loans made to the employee; and
• Investments in the sponsor (or a related organisation).

This means that the repayment of a loan to cover visa fees will be considered by the Home Office when checking whether the employer is paying at least the minimum salary required for sponsorship. If the minimum salary isn’t being met, the employee will not be granted the Skilled Worker visa.

When making this calculation, the Home Office will average any relevant deductions over the period the employee is being sponsored for. For example, if a sponsor loans their employee £3,874 to cover the cost of a 3-year Skilled Worker visa application, then a subtraction of £1,291.33 will need to be deducted from the annual salary stated on the CoS. If this subtraction brings the salary offered below the minimum level for sponsorship, the visa application will be refused by the Home Office.

Helpfully, the guidance does specify that money will not be subtracted from the salary where the payment is not related to business costs, immigration costs or investment but is an additional benefit offer which the worker has a genuine choice whether to take up, such as a salary sacrifice arrangement. Of course, you must still ensure that any such arrangement does not result in the worker’s pay falling below National Minimum Wage.

With visa application fees becoming increasingly expensive, many employers do look to cover all, or a contribution towards, those fees on the employee’s behalf and often, this offer is made on the condition that the employee enters into a loan agreement. Whilst well-intentioned, employers are now advised to take legal advice to ensure that the proposed arrangement does not negatively impact the visa sponsorship.

Currently, there are some areas of uncertainty in relation to whether clawback arrangements are caught by these rules and whether the rules also apply to Indefinite Leave to Remain applications and therefore further clarity will be welcomed from the Home Office on these areas.

In the meantime, we would recommend that sponsors review their existing and planned loan arrangements as well as their precedent agreements and seek legal advice from a member of our immigration team to avoid negative repercussions.