**

Employers that sponsor overseas workers have received a clearer answer on one tax question in the UK Budget 2026. The Budget document says the government will legislate so that an employer's payment of the Immigration Skills Charge, or of a Certificate of Sponsorship fee, is not treated as a taxable benefit in kind. The change is described as applying to payments made on or after 28 October 2026.

The point matters because sponsorship already involves several separate charges, and uncertainty over tax treatment can add an extra cost or an extra compliance question for payroll teams. A benefit-in-kind charge would, in effect, treat an employer-paid cost as a taxable perk for the worker. Removing that treatment for these two specific payments simplifies the position for sponsors, although it does not remove the underlying charges themselves.

What the Budget does — and does not — change

The measure is limited in scope. It covers the Immigration Skills Charge and the Certificate of Sponsorship fee when paid by the employer. It does not, on the wording published so far, change visa application fees, the Immigration Health Surcharge, or other immigration costs, and the Budget material does not present it as a reduction in sponsorship fees.

Timing is also important. The Budget says the change will be introduced through legislation in the Finance Bill 2026-27, so sponsors should not assume every detail is already in final law. Commentary on the announcement notes that the measure is expected to apply back to Budget day once the Bill passes, but the safest course is to follow the published Budget text and any later Finance Bill wording.

Employers and workers should check the official GOV.UK Budget page and the relevant sponsor guidance before acting, as rules and legislation can change.

---

Sources: GOV.UK Budget 2026; Pinsent Masons.