What is a Sponsor Licence for Sole Proprietor/Trader?
Sponsor Licences allow sole proprietors/traders to employ skilled foreign workers who do not have the automatic right to work in the UK. This applies to people living outside of the UK, and people currently living in the UK on a different visa – for example a Student Visa.
By requiring Sponsor Licences for sole proprietors/traders, the Home Office aims to tackle the rate of illegal employment in the UK and improve the rights of workers.
In addition, sole proprietors benefit from being able to recruit talented employees from all over the world, creating a diverse company with a unique skillset. Furthermore, staff employed in this way are more likely to stay in the job long term, increasing the productivity of the organisation.
- What is a Sponsor Licence for Sole Proprietor/Trader?
- Is a Sponsor Licence Application Always Necessary?
- Eligibility Requirements for a Sponsor Licence for Sole Proprietor/Trader
- Who Can I Sponsor With a Sponsor Licence?
- How to Apply for a Sponsor Licence For a Sole Proprietor/Trader
- Cost of a Sponsor Licence for Sole Proprietor/Trader
- Sponsor Licence Ratings for Sole Proprietor/Trader
- Switching from a Sole Trader to a Limited Company with a Sponsor Licence
- Certificates of Sponsorship for Sole Proprietor/Trader
- Validity and Renewal of a Sponsor Licence For a Sole Proprietor/Trader
- Common Mistakes Made in the Application Process for the Sponsor Licence
- How Can IAS Help?
- Frequently Asked Questions
Is a Sponsor Licence Application Always Necessary?
To employ workers in the UK from abroad, a Sponsor Licence is required. If an employer attempted to recruit foreign workers without getting a Sponsor Licence, they would face legal action.
Unsponsored working is not only dangerous for the sole trader, but it also poses significant risk to the foreign worker. Due to UK immigration laws, without the right to live in the UK, they will have to leave the country.
Sometimes, foreign workers are unaware that their employer has not obtained a Certificate of Sponsorship for them. In this case, the employee must request that the organisation seeks a licence. If this is refused, the employee should try to find a job with a registered sponsor.
However, there are certain groups that do not need a Certificate of Sponsorship. This includes: Commonwealth citizens with a valid UK Ancestry Visa or with the ‘right of abode’, anyone with Indefinite Leave to Remain status, Irish citizens, individuals with settled or pre-settled status granted via the EU settlement scheme and British Overseas Territories citizens.
If you are unclear about whether a worker requires a Sponsor Licence then you may want to reach out to an immigration specialist for advice.
Eligibility Requirements for a Sponsor Licence for Sole Proprietor/Trader
Sponsor Licence applicants must be able to prove that they can provide genuine employment to foreign workers. This may involve providing evidence of being registered with a regulatory body, proof of employee salaries and demonstrating lawful trading or operating in the UK.
Who can I Sponsor With a Sponsor Licence?
A Skilled Worker Sponsor Licence can be held by any UK employer looking to hire a foreign worker within a genuine organisation.
The term ‘skilled worker’ refers to anyone who is on the list of eligible occupations in the UK. Qualifying job roles include marketing directors, senior police officers, property managers, electrical engineers and farmers.
Foreign employees can also be brought over to work in the UK branch of their company with a Senior or Specialist Worker Visa (this is an alternative route to the retired Intra-company Transfer Visa patyhway). The job role must be on the list of eligible applications and have a salary of at least £45,800 per year.
Similarly, graduates can be sponsored on the Graduate Trainee visa if they intend to transfer to the UK whilst continuing to work for the same company. The salary for a Graduate Trainee Visa role must be a minimum of £24,220 per year.
Finally, two specific job titles that make a foreign worker eligible for a Sponsor Licence are religious ministers and sportspeople.
It is also possible to recruit temporary workers, including religious workers, charity workers, seasonal workers, international agreement workers, creative or sporting worker and government authorised exchange workers.
There are different rules regarding how long each of these temporary sponsor workers can be employed in the UK, depending on the job title. However, none of these roles can exceed 24 months.
How to Apply for a Sponsor Licence For a Sole Proprietor/Trader
The application for the Sponsor Licence can be found on the government website. The applicant must submit at least four of the required documents for the Sponsor Licence.
Acceptable documents include:
- Employer’s liability insurance
- Proof of ownership of business premises
- PAYE number
- Certificate of VAT registration
- Latest audited annual accounts
- Covering letter
- Latest corporate bank account statement.
Further information will also be required, namely:
- Contact details
- Company opening hours
- Name of the job industry
- Names and job titles of all employees.
Cost of a Sponsor Licence for Sole Proprietor/Trader
The Sponsor Licence application fee varies depending on the size of the business. Small businesses can expect to pay £536, while large companies are charged £1,476.
The size of a company is not only determined by the number of employees (50 or fewer), but also the turnover (£10.2 million or under), and the balance sheet (£5.1 million or under).
As well as the fixed application fee, there can be other costs involved, such as:
- The sponsored worker’s application fees (variable)
- Assigning the Certificate of Sponsorship (£199 per certificate for workers and for international sportspeople with a Certificate of Sponsorship of more than 12 months, £21 for temporary workers and for international sportspeople with a Certificate of Sponsorship of less than 12 months)
- Immigration Skills Charge (£364 for small companies, or £1000 per year, per worker)
A-Rating Sponsor Licence
This is the full Sponsor Licence that allows sole traders to employ overseas workers in the UK.
People with a B-rating licence can upgrade to this licence by paying £1,476 for a UK Visas and Immigration action plan. The end result of this could be obtaining a new A-rating licence, keeping a B-rating licence, or losing a licence completely.
B-Rating Sponsor Licence
B-rating Sponsor Licences are generally held by sole traders who have not been compliant with the Home Office regulations. In most cases, employers with this licence are permitted to keep their current personnel, but they cannot sponsor a new foreign worker.
If a company does not comply with Home Office rules by a certain time, the licence can be removed.
Switching from a Sole Trader to a Limited Company with a Sponsor Licence
It is possible to switch from a sole trader to a limited company with a Sponsor Licence, but it is not recommended. The Home Office may have reason to be suspicious about the application, though it would most likely be approved if all of the sponsorship licence application requirements were met.
People who are interested in changing from a sole trader to a limit company after applying for a Sponsor Licence must inform the Home Office within 20 days.
Most people find that it is a much smoother process to switch to a limited company after their Sponsor Licence application has been approved.
Certificates of Sponsorship for Sole Proprietor/Trader
Employers who are planning on hiring foreign staff via a Sponsor Licence must obtain a certificate of sponsorship for each employee.
With this certificate, the employee can apply for a visa such as the Scale Up Worker Visa or the Skilled Worker Visa. They must do this within three months of receiving the certificate, but at least three months before the start date of their new job.
Validity and Renewal of a Sponsor Licence For a Sole Proprietor/Trader
Sponsor Licences are valid for four years after being issued. Before the licence expires, the company must apply for a renewal. If there have been no compliance visits by the Home Office throughout the Sponsor Licence process, an inspection will be arranged.
The processing time for a Sponsor Licence renewal is the same as it is for a new licence, an average of 8 weeks.
Common Mistakes Made in the Application Process for the Sponsor Licence
Some applicants do not respond to the Home Office in a timely manner, and this can result in a Sponsor Licence refusal. Others are responsive, but they do not provide all of the requested supporting documents.
Another common mistake is to not have enough evidence of genuine work. The employer must be able to prove that they are offering genuine vacancies to people outside of the UK, which means there must be evidence of the company needing the role to be filled.
Sometimes, the Home Office arranges a pre-licence visit, and the organisation is not prepared. This can easily result in a rejection, so employers should perform regular mock audits in advance of the visit.
Finally, one of the Sponsor Licence requirements is that the company must take responsibility for employing workers who meet the UK immigration rules. This includes meeting the points requirements, having the appropriate qualifications, and possessing the required language skills. If any of these criteria are not met, the online application form will be rejected.
How Can IAS Help?
If you are a sole proprietor or trader who is in need of a Sponsor Licence to hire foreign staff, our solicitors can help. They will outline the rules of the Sponsor Licence, the eligibility criteria, and the steps you need to take to apply for a licence.
Call us on 0333 305 9375 to get professional Sponsor Licence guidance as a sole proprietor/trader, or for advice on other UK immigration laws.
Last modified on June 2nd, 2023 at 2:38 pm
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If your application is rejected, and you have detected an error in the decision, you can submit a pre-licence error correction. If this is not accepted, you would have to either request a judicial review, or wait until the cooling-off period is over before making a new application.
It’s important to correct any previous errors when you submit a new application. Some common mistakes to look out for are: delayed responses to the Home Office, insufficient evidence of genuineness, failed audit tests, and a lack of documentation.
The Home Office decision letter will inform the sole trader of their cooling-off period. It is usually 6 months, but in the event that there has been a previous civil penalty imposed, it could be up to 12 months.
The compliance duties that you are expected to follow as an approved sponsor are: monitoring employee absences, record-keeping, communicating with the Home Office when there is a change of circumstances, and reporting.
For example, Sponsor Licence holders must inform the Home Office when their sponsor is absent from work for extended periods, as well as keeping a record of the sponsor’s contact details, and providing new documents to the Home Office as requested.
Switching to a limited company can be beneficial for tax purposes and financial reasons. However, in terms of being a Sponsor Licence holder, there are not any obvious advantages to being a limited company as opposed to a sole trader.
You should always consult a solicitor before making this decision, as they may be able to identify potential challenges that you have not yet conceived of.
Sponsors must have the appropriate systems in place to be approved for the Sponsor Licence, which includes having a suitable HR department. This ensures the foreign worker can be appropriately monitored throughout their time working in the UK.
Yes, other staff members can help with the process. In fact, it is a requirement to select key personnel to work on the sponsor management system, e.g., recording meetings and reporting absences.
As well as recruiting staff to manage the sponsor, employers should select an authorising officer to oversee the entire sponsorship, including managing the aforementioned personnel.