What employers need to know about the UK’s 2025 immigration reforms

In May 2025, the UK government released a new immigration White Paper titled “Restoring Control over the Immigration System”, signalling a significant shift in how international talent enters and remains in the country. These changes, which have been years in the making, aim to reduce overall migration levels while encouraging high-skilled talent.

For international employers, the reforms introduce significant adjustments to sponsorship rules, settlement pathways, skill thresholds, and visa costs. Whether you’re currently hiring in the UK or planning to expand, understanding these updates is critical for maintaining compliance and workforce continuity.

This guide outlines the key immigration reforms and how they affect employer responsibilities, plus how a British Employer of Record (EOR) can help you manage the transition.

Overview of the 2025 immigration reforms

The White Paper outlines seven major proposals that will reshape the UK’s immigration landscape from late 2025 onward. These include changes to visa eligibility, settlement criteria, and employer costs.

1. The settlement qualifying period increased. The route to Indefinite Leave to Remain (ILR) will now take 10 years instead of 5, except in exceptional circumstances. This lengthens the time skilled workers must remain in the UK before securing permanent residence.

2. Higher skill threshold for work visas. The minimum qualification for Skilled Worker visas has risen from RQF Level 3 to Level 6, requiring applicants to hold degree-level qualifications or equivalent. This excludes many medium- and low-skilled occupations previously eligible.

3. Immigration Salary List abolished. The existing list of shortage occupations, which allowed salary concessions, is being replaced by a Temporary Shortage List with stricter limits and expiry dates. This reduces flexibility for employers in industries with ongoing shortages.

4. Immigration Skills Charge increased by 32%. Employers sponsoring workers will face a sharp rise in fees: now approximately £1,820 per year per worker for large companies, and £680 for smaller sponsors.

5. Restrictions on Overseas Care Worker Recruitment. From July 2025, employers will no longer be able to sponsor new overseas care workers. Transitional rules apply to existing visa holders; however, the change necessitates a shift towards domestic recruitment.

6. Graduate visa reduced from 24 to 18 months. International graduates from UK institutions will have 18 months (instead of two years) to find employment or switch visa routes.

7. Stricter English language requirements. Enhanced English proficiency standards will apply to both visa applicants and their dependents, with stricter requirements for visa extensions and permanent residency applications.

Implications for employers

The 2025 immigration reforms introduce new operational and financial pressures for employers, particularly those that rely on sponsored international talent. One primary concern is the increased cost of sponsorship. With the Immigration Skills Charge rising significantly, hiring overseas workers now comes with a much heavier financial burden. For companies that sponsor multiple employees, these additional expenses can quickly add up.

The reforms also reduce the pool of eligible candidates. By raising the skill threshold to RQF Level 6, many roles in industries such as logistics, retail, manufacturing, and care no longer qualify for visas. Employers will have to reconsider their hiring strategies and rely more on local recruitment.

There are also new pressures on workforce planning. As the Graduate visa period shortens and sponsorship criteria tighten, businesses must act fast to avoid losing key talent. This makes succession planning and internal upskilling more crucial than ever.

Finally, compliance has become more complex. Tighter English language requirements and stricter documentation standards increase the risk for sponsor licence holders. Any misstep, whether administrative or legal, can result in licence suspension, financial penalties, or reputational harm.

Preparing for the changes

Employers who act early will be better equipped to handle the 2025 reforms. Here are some recommended steps:

• Review job eligibility under the new RQF Level 6 requirement and Temporary Shortage List.
• Update sponsorship systems, processes, and compliance documentation to meet future audit standards.
• Budget for the increased Skills Charge and potential immigration adviser fees.
• Invest in domestic training and apprenticeships to offset limits on foreign hiring in lower-skilled sectors.
• Stay informed by tracking Home Office announcements and timelines.

In summary, the 2025 immigration reforms will reshape how businesses in the UK hire and retain international talent. By taking proactive steps such as reviewing job roles, strengthening sponsorship processes, and preparing for higher costs, employers can reduce disruption and maintain access to skilled workers.

How a British Employer of Record can assist

If your company doesn’t have a UK legal entity, or if you want to minimise the burden of navigating these reforms, a British Employer of Record (EOR) provides a straightforward, compliant solution.

Here’s how an EOR helps:

1. Acts as the legal employer in the UK: a British EOR hires employees on your behalf, handling all employment contracts, payroll, and local tax obligations.

2. Manages sponsorship and compliance: for companies that qualify, an EOR can manage sponsorship licenses, monitor skill thresholds, ensure visa timelines are met, and maintain records to Home Office standards.

3. Adapts to immigration changes: EORs stay up to date with evolving legislation, ensuring your operations remain compliant with new settlement periods, salary charges, and visa policies.

4. Provides flexibility: whether you’re testing the UK market or expanding gradually, an EOR removes the need to set up a local entity, saving time, legal effort, and money.

Know the reforms

The 2025 UK immigration reforms introduce notable changes to visa eligibility, costs, and employer responsibilities. These changes are especially relevant for companies hiring global talent or expanding into the UK.

To remain competitive and compliant, employers must prepare now by understanding the new rules, reassessing talent strategies, and considering alternative solutions like EOR support.

Looking to hire in the UK without compliance headaches? Contact us to learn about how a British Employer of Record can help you adapt to the changing immigration environment with ease and confidence.