Published: 2 September 2026
UK employers holding a sponsor licence need to be aware of several important Home Office changes taking effect during September and October 2026.
On 28 August 2026, UK Visas and Immigration published version 08/26 of its Worker and Temporary Worker guidance on sponsor duties and compliance. It replaces version 05/26 and introduces changes concerning the Sponsorship Management System, Level 2 Users, inactive sponsor licences and right to work compliance.
For employers, these are not simply technical changes. They affect who can access and operate the sponsor licence, how organisations manage sponsored workers and, from October, which working relationships may fall within the illegal working regime.
1. Mandatory Multi-Factor Authentication for SMS Users from 3 September 2026
One of the most immediate changes is the introduction of mandatory multi-factor authentication, or MFA, for Sponsorship Management System users from 3 September 2026.
That date comes directly from the Home Office’s 08/26 sponsor guidance. Its change list states that Annex C3(f) has been updated to reflect mandatory MFA for SMS Users from 3 September 2026.
The Home Office also published SMS Manual 13: Multi-factor authentication for UK visa sponsors on 28 August 2026. The manual provides step-by-step instructions explaining how MFA works when users log into the SMS.
This matters because the SMS is where sponsors carry out important functions, including assigning Certificates of Sponsorship and reporting changes concerning sponsored workers and the organisation.
Employers should therefore make sure their SMS users are ready for the new authentication process and that the personal and contact information associated with those users is accurate.
This should not be left until somebody urgently needs to assign a Certificate of Sponsorship or make a time-sensitive report.
2. Level 2 SMS Users Are Being Phased Out
The August guidance also reflects the phasing out of Level 2 Users.
The current Part 3 guidance states that a Level 1 User can add Level 2 Users before 9 September 2026, or remove existing Level 2 Users. The Home Office directs sponsors to section L4 of Part 1 for the full details of the change.
Employers that currently rely on Level 2 Users should therefore review their SMS arrangements now.
This is also a useful opportunity to check whether:
- the right people have access to the licence;
- former employees still appear as SMS users;
- there is an appropriate Level 1 User in place; and
- responsibility for sponsorship is not concentrated entirely in one person.
3. Inactive SMS User Accounts Can Have Serious Consequences
A less obvious but important part of the August update concerns inactive SMS User accounts.
The Home Office has amended Annex C2(i) and C2(k) to deal specifically with revocation arising from its inactive SMS User account process.
The guidance makes clear that the Home Office can normally revoke a licence where there is no Level 1 User in place who is able to undertake day-to-day sponsorship activities or who meets the relevant Key Personnel requirements.
The August amendment provides that where the licence is revoked solely because of the inactive SMS User account process, the normal cooling-off period will be disregarded.
That does not make the issue unimportant. Quite the opposite.
It demonstrates that maintaining active and appropriate SMS users forms part of sponsor licence compliance itself.
Employers should therefore periodically review their SMS users rather than waiting until access becomes a problem.
4. The Home Office Is Looking at Inactive Sponsor Licences
Section C5 of the latest guidance has also been renamed “Inactive sponsor licences”.
Since 6 April 2024, most sponsor licences no longer have to be renewed every four years and can remain valid indefinitely unless they are surrendered or revoked.
However, the Home Office now says that the register of licensed sponsors is intended for organisations actively using their licence. It also states that it will publish further guidance on how inactive licences will be managed in a future update.
Sponsors that are not currently sponsoring any workers can consider surrendering their licence.
Organisations that want to retain a licence for future recruitment should make sure it continues to be properly managed rather than assuming an unused licence can simply be ignored.
5. Right to Work Checks Expand from 1 October 2026
A particularly important change takes effect on 1 October 2026.
Section 48 of the Border Security, Asylum and Immigration Act 2025 amends the Immigration, Asylum and Nationality Act 2006 and extends the illegal working regime beyond conventional employment.
The legislation provides that references to employing a person will also include:
- engaging an individual under a worker’s contract;
- engaging an individual subcontractor; and
- an online matching service providing details of an individual service provider to potential clients or customers.
The Home Office has incorporated the same three categories into paragraph C7.27 of the August sponsor guidance and confirms that the extension applies from 1 October 2026.
The Home Office also published a Draft Employer’s Guide to Right to Work Checks on 16 July 2026 in preparation for the new regime. It remains identified as draft guidance at the time of writing.
This is particularly relevant for organisations using contractors, flexible workers, outsourced labour or platform-based working arrangements.
Extended liability can also reach further into subcontracting arrangements
The new regime is not limited to businesses that contract directly with the individual.
Section 48 also introduces provisions capable of extending civil penalty liability beyond the person holding the direct contractual relationship with the worker in certain subcontracting and other arrangements.
This means an organisation further up a contractual chain may potentially face exposure where illegal working occurs further down that chain, depending on the arrangement and whether the prescribed requirements for establishing a statutory excuse have been satisfied. This is particularly significant for organisations with substantial outsourced or subcontracted workforces.
Businesses should therefore review not only their ordinary employee onboarding procedures, but also how labour is supplied through contractors and subcontractors.
6. Civil Penalties Can Put the Sponsor Licence at Risk
The consequences of getting right to work compliance wrong can extend beyond a financial penalty.
The current sponsor guidance states that where a sponsor or employer breaches the statutory right to work scheme, the Home Office may issue a civil penalty of up to £60,000 for each illegal worker.
More importantly for sponsor licence holders, the guidance states that where the Home Office issues a civil penalty, it is likely to revoke the sponsor licence.
The organisation will then not normally be eligible for another sponsor licence until at least 12 months have passed since the civil penalty was paid in full. The period can extend to up to five years where more than one civil penalty has been issued.
Right to work checking is therefore not simply an HR administration issue. For licensed sponsors, it can become a sponsor licence issue.
7. Sponsor Reporting Duties: What Must Be Reported?
The September changes do not replace the continuing reporting responsibilities placed on sponsors.
Unless another period is specified, changes affecting sponsored workers generally have to be reported within 10 working days. Relevant changes concerning the sponsoring organisation generally have to be reported within 20 working days.
Among the events employers should recognise are:
- a sponsored worker failing to start the sponsored role within 28 days of the relevant start date;
- a sponsored worker being absent without permission for more than 10 consecutive working days;
- absence without pay, or on reduced pay, for more than four weeks in total in a calendar year, subject to the exceptions in the sponsor guidance;
- a sponsored worker’s salary or pay being reduced from the level stated on the Certificate of Sponsorship;
- a change to the worker’s job role, job title or core duties where the relevant rules permit the change;
- a change to the sponsored worker’s normal work location; and
- the employer ceasing to sponsor the worker.
The salary rule is particularly worth noting. The guidance says salary or pay reductions from the level stated on the CoS must be reported. Salary increases do not generally need to be reported, except where a sponsor has been sponsoring a pre-registration nurse or midwife who subsequently completes registration.
An apparently ordinary HR decision can therefore have a separate immigration consequence.
8. Hybrid Working Does Not Usually Need to Be Reported, But Fully Remote Working Does
The Home Office guidance makes a clear distinction between hybrid working and contractual home working.
A sponsor does not need to report simply because a sponsored worker moves to a hybrid working pattern.
However, the sponsor must still:
- report changes to the worker’s main office location;
- report new client sites where relevant; and
- maintain suitable records of the worker’s working pattern.
The position is different where a sponsored worker becomes an entirely remote contractual home worker with little or no requirement to attend the sponsor’s premises or a client site.
That arrangement must be reported through the SMS.
The Home Office also expressly reserves the right in such cases to ask the sponsor to explain why the worker needs to be sponsored to come to the UK if, for example, the role could be undertaken remotely from the worker’s home country.
This is an important issue for organisations whose working practices have become increasingly remote.
9. Sponsor Record-Keeping Requirements
The Home Office also updated Appendix D: Record-Keeping Duties on 3 August 2026. The current version is 08/26.
Appendix D requires sponsors to retain specified documents relating to matters including right to work, recruitment, salary, the skill level of sponsored roles and other sponsorship information.
Documents may be retained electronically or on paper. There is no prescribed storage method, but sponsors must be able to provide them to the Home Office when requested.
How long must the documents be kept?
Unless Appendix D specifies otherwise, documents relating to a sponsored worker must generally be kept throughout the period of sponsorship and until whichever occurs first:
- one year after sponsorship of the worker ends; or
- the date a compliance officer examines and approves the documents, where this occurs less than one year after sponsorship ends.
Documents submitted as part of the sponsor licence application must also be retained for as long as the organisation holds the sponsor licence. Other legal obligations may require some records to be retained for longer.
10. UKVI Can Carry Out Announced or Unannounced Compliance Checks
Sponsor compliance should not begin when a Home Office officer arrives.
Current guidance confirms that the Home Office can check sponsors at any time and that compliance visits or interviews can be either announced or unannounced.
Compliance officers may inspect records and systems, interview sponsored workers and other staff, check information provided in sponsor licence or visa applications and examine whether the organisation is complying with its wider sponsor duties.
Where breaches are relatively minor and capable of correction, the Home Office may downgrade a licence and issue an action plan. More serious or systematic failings can lead to suspension or revocation.
What Should Sponsor Licence Holders Do Now?
September 2026 is therefore a sensible time for sponsor licence holders to carry out a practical compliance review:
- Check who currently has access to the SMS.
- Make sure relevant SMS users understand mandatory MFA from 3 September 2026.
- Review Level 2 User arrangements in light of the 9 September 2026 change.
- Check that Level 1 User accounts remain active and appropriate.
- Review sponsored-worker reporting procedures and deadlines.
- Make sure HR and payroll communicate salary, role and workplace changes to the person responsible for sponsorship.
- Review hybrid and fully remote working arrangements.
- Check that sponsor records can be produced quickly if UKVI asks for them.
- Review contractors, subcontractors and other labour arrangements before the 1 October 2026 right to work changes.
- Consider whether managers responsible for sponsored workers understand the organisation’s immigration compliance responsibilities.
A sponsor licence should not be viewed simply as permission to recruit overseas workers. It brings with it continuing obligations that need to be managed throughout the life of the licence.
How Atwal Law Can Help
Atwal Law advises businesses and organisations on sponsor licence applications, Skilled Worker sponsorship and sponsor compliance.
We assist organisations applying for their first sponsor licence as well as existing sponsors that want to review their systems, deal with potential compliance concerns or prepare for Home Office scrutiny.
We have also developed Atwal Shield, our employer immigration, sponsor compliance and international workforce support programme.
Atwal Shield is not designed as a rigid, one-size-fits-all retainer. We look at the organisation’s workforce, sponsorship arrangements, internal resources and priorities and tailor the emphasis of the programme around the areas where support is most useful.
Depending on the organisation, this can include sponsor compliance tools, immigration updates, training for HR and managers, preparation for a Home Office compliance visit and immigration support for international employees.
Concerned About Your Sponsor Licence Compliance?
If your organisation holds a sponsor licence and you would like to identify potential weaknesses in your current arrangements, contact Atwal Law to discuss a Sponsor Licence Compliance Review.
Atwal Law
UK Immigration Lawyers
Telephone: 07973 760075
Website: www.atwallaw.co.uk
This article is provided for general information only and does not constitute legal advice. Immigration law, sponsor guidance and Home Office procedures are subject to change. Advice should be obtained on the particular circumstances of an individual or organisation.