UK Immigration Updates: Earned Settlement Reforms and Budget Immigration Measures

The Autumn Budget 2026 delivered on 28 October also announced changes to the Skilled Worker salary requirements, additional time for eligible workers to find a new sponsor, changes to graduate and talent visa routes, and tax relief for certain employer-paid sponsorship costs.

EARNED SETTLEMENT: LONGER RESIDENCE WITH FASTER PATHWAYS

The standard qualifying period for settlement, also known as "indefinite leave to remain", will increase from five to 10 years. For applicants on eligible routes, earnings will determine access to shorter pathways, subject to meeting the other settlement requirements. The response sets out the following earnings-based tests:

EXISTING WORKERS AND TIME SPENT ON OTHER VISAS

There will be no blanket exemption for workers who are already in the United Kingdom. For the affected pre-April 2024 Skilled Worker cohort in below-degree-level roles, transitional arrangements allowing visa extensions on existing terms will be extended to 2035 rather than ending in 2030. This will allow affected workers to apply using the 10-year route to settlement.

The separate 10-year Long Residence route will close. Time spent on temporary routes, including Student, Graduate, High Potential Individual, and Global Business Mobility will not count towards qualifying residence under the new framework. This makes the choice and timing of an employee's immigration route particularly important where long-term UK residence is intended.

ADDITIONAL SETTLEMENT REQUIREMENTS

Applicants will generally need to demonstrate English at B2 level and pass the Life in the UK test, subject to relevant exemptions.

The response also introduces stricter criminal-record and government-debt requirements. Adult applicants with a UK criminal record will be refused settlement, with qualifying overseas convictions also relevant. Outstanding government debt, including unpaid tax and National Insurance contributions, will prevent settlement.

Specified immigration breaches committed as an adult, including overstaying or breaching visa conditions, will place applicants on a 20-year pathway. Accessing specified public funds during the five years before application may also prevent settlement on a shorter pathway, with further detail on exemptions to follow.

DEPENDANTS

Eligible couples will be able to combine earnings to meet a £25,142 household minimum contribution requirement. Partners arriving together may settle together if they meet the relevant requirements; a partner joining later must complete the same qualifying residence period.

Children will generally remain able to settle with their parents. Young adults aged 18–24 who retain child-dependant status will not need to meet an individual earnings requirement, although other adult requirements will apply. Those aged 25 or older when their family becomes eligible will generally need to qualify independently or move onto an appropriate immigration route in their own right.

BUDGET 2026: BUSINESS IMMIGRATION MEASURES

Skilled Worker Salary Requirements

From spring 2027, occupation-specific salary thresholds will move from median earnings to the 25th percentile. The general threshold will be updated using 2026 wage data, with annual updates thereafter. New-entrant discounts will be standardised and the PhD discount will be removed. Lower occupation-specific rates will therefore not necessarily mean lower required pay for every role.

Curtailment Period Change

Changes planned for 2027 will give the highest-skilled workers up to six months to find another job when their sponsored permission is curtailed. The period will depend on time spent in their previous highly paid role; detailed eligibility criteria remain to be confirmed.

High Potential Individual and Graduate Route Changes

The High Potential Individual route will expand to eligible qualifications from the world's top 150 institutions, with a proportionate increase in its cap.

A two-year Graduate visa is planned for graduates of high-compliance universities with strong labour-market outcomes. The list of qualifying institutions is still outstanding.

Global Talent

By spring 2027, UK Research and Innovation will identify additional research-intensive businesses in industrial strategy sectors that could host applicants under the Global Talent endorsed funder pathway.

Tax Treatment of Sponsorship Costs

The Finance Bill 2026–27 specifies that the employer's payment of the Immigration Skills Charge or a Certificate of Sponsorship fee is not treated as a taxable benefit in kind for payments made on or after 28 October 2026. Employers should note that these fees must always be paid by the sponsoring employer and cannot be passed onto or reimbursed by the sponsored worker.

ACTIONS FOR EMPLOYERS

Employers should consider the following steps now:

• Review settlement timelines and supporting records. Identify employees who are approaching settlement, assess historical earnings rather than current salary alone, and review previous visa routes and dependants' positions. Prioritise applications that may be submitted under the existing rules.
• Model longer sponsorship costs. Allow for additional visa extensions, sponsorship charges, and health surcharges where settlement may be delayed. Review retention plans and communications without promising a particular settlement date.
• Reassess recruitment and immigration-route options. Evaluate how the announced salary, graduate changes, and talent-route changes could affect recruitment. Distinguish short-term hiring flexibility from a route's ability to support permanent residence and continue applying current rules until changes take effect.
• Coordinate human resources, mobility, legal, and payroll teams. Separate sponsorship expenditure by payment date, visa route, and cost category when assessing the new tax relief. Maintain robust visa-expiry and compliance controls and monitor the implementing rules before updating policies or employee guidance.