UK Budget 2026: immigration changes announced

The 2026 Budget ambitiously states that the UK government "will deliver the most pro-business migration system in Europe for high-skill workers".  We examine the package of immigration measures announced, what they may mean for individuals and businesses, and what's missing. 

After several years of tightening immigration policy, the changes signify a positive move, as part of the Government’s wider growth agenda, towards helping innovative businesses recruit highly skilled individuals and to make the UK more attractive to globally mobile talent.  However, the measures are limited in scope and highly selective. The principal beneficiaries are highly skilled/highly paid workers, international graduates, businesses sponsoring skilled workers and research-intensive businesses. 

Most of the proposals are commitments for 2027, rather than delivering immediate benefits for employers and highly skilled individuals, and the practical value of some measures will depend on the definitions and eligibility criteria which are yet to be published.  We can expect an update on some of these details with new Immigration Rules and guidance anticipated before the end of this year.

1. Skilled Worker changes. 

a). Reduced salary requirements 

Following the Migration Advisory Committee's (MAC) recommendations (set out in its December 2025 report), the government will reduce the minimum salary requirements for sponsored workers.

Sponsored workers' pay must meet the 'general' salary threshold (in most cases £41,700) and the occupational 'going rate' based on the relevant Standard Occupational Code (SOC) applicable to the role, whichever is higher. Since April 2024, the going rate has been benchmarked against the median (50th percentile) salary across the whole UK – a historically high level that has contributed to a steep decrease in visa applications to the Skilled Worker route.

The budget announced that the going rate will return to the lower 25th percentile (and be updated annually in line with national wage data). This will give relief to some employers, particularly those outside London/South East England, in certain sectors and SMEs, which found the higher rates unachievable for their labour markets.

However, the general salary threshold will remain and will be uprated in line with national wage growth levels (the adjusted amount is yet to be announced) which may negate the benefit of the reduction in the occupational salary threshold for some roles where the general threshold remains higher.

It is also yet to be confirmed whether the government will now proceed with the rest of the MACs recommendations.   

b). Extending the time for the highest skilled workers to secure new sponsorship

The Government will work towards allowing the 'highest-skilled' (which may equate to most highly paid) sponsored workers an extended curtailment period (in effect a grace period) after leaving their sponsored role, of up to six months (currently 60 days). The precise period will however vary according to how long the individual worked in their previous 'highly paid' role – details of the sliding scale have not been announced, nor any definitions of highest skilled and highly paid roles. 

A longer period would benefit the highest-skilled workers (and their families), giving greater confidence that they will have sufficient time to find another role and reducing the likelihood of highly skilled individuals leaving the UK. 

Further detail will be needed on who this will be available to, when it takes effect, and whether current restrictions on overseas travel while holding curtailed leave will be lifted. 

The immigration proposal also sits alongside planned reform of contractual non-compete restrictions to reduce friction for start-ups and scale-ups, and consultation on the wider use of restrictive practices. Together, the measures point towards a more mobile labour market and retention of high-value talent in the UK. 

c). Clarification on tax treatment of Immigration Skills Charge (ISC) and Certificates of Sponsorship (CoS)

The Government will introduce legislation in the Finance Bill 2026-27 which makes clear that an employer’s payment of the ISC and CoS fee for sponsored workers (which cannot be passed on to the worker) is not a taxable 'benefit in kind' to the worker, reversing HM Revenue & Customs' current position. The change will apply to payments made on or after 28 October 2026. Employers should review and adjust their payroll and tax reporting position to ensure the extra tax is not paid.

2. High Potential Individual (HPI) - route expansion 

The Government will expand the High Potential Individual route to graduates (within the last 5 years) from the world’s top 150 universities (having already expanded the list to the top 100 less than a year ago) with a proportionate increase to the route’s cap (expected to allow up to 12,000 top global graduates per year, up from the current cap of 8,000). 

The flexibility of the HPI visa can be particularly useful to start-ups, charities and not-for-profit organisations and smaller businesses that do not hold a sponsor licence or are unable to support sponsorship costs. It allows holders to work in the UK without sponsorship and may therefore increase the talent available to UK employers from overseas, potentially making them more attractive and easier for employers to hire. The route does not however lead to settlement, requiring holders to switch to another route after 2 years if they wish to remain in the UK – meaning that some individuals and employers therefore prefer to consider sponsored routes from the outset.

3. Graduate route – two-year grant for students at selected UK universities

The Government will set the Graduate visa at two years for graduates of UK universities demonstrating ‘high compliance’ with ‘strong labour market outcomes’. This announcement partially reverses the Home Office decision in May 2025 to reduce the two-year Graduate visa to 18 months from 1 January 2027 (UK PhD graduates continue to benefit from a 3-year grant period).

This change will create a two-tier system of Graduate status holders with graduates from certain institutions (likely to be predominantly Russell Group) being able to access a two-year grant on completion of their course, and an 18-month Graduate visa offering to all other qualifying UK graduates.  

This is likely to operate as a behavioural and marketing incentive for universities rather than making a significant difference to eligible graduates themselves. It also brings the offer for graduates at select UK universities in line with the HPI visa route for top overseas graduates (although inequalities remain between the routes as the HPI is open to those graduating from leading overseas institutions in the last 5 years). The policy definitions of ‘high compliance’ and ‘strong labour market outcomes’, the list of qualifying institutions and the treatment of existing students and pending applications will be determinative of whether or not the proposed changes will result in meaningful impact for UK employers and universities.

4. Global Talent - wider access to the endorsed funder pathway

Since the 2025 Budget, the Global Talent endorsed funder pathway has been expanded to include over 100 research and development-intensive businesses employing researchers, scientists and engineers coming to work in UK industry. UK Research and Innovation ('UKRI') will identify further R&D-intensive businesses in Industrial Strategy sectors that could act as host organisations by Spring 2027. Many industrial businesses and research organisations function as innovation incubators and offer non-traditional employment eg Fellowships, or Entrepreneur in Residence roles to founders and creators, which are specifically designed to allow for parallel work for their own or other businesses, and which sponsored work visa restrictions stymie.  A widening of the Global Talent route could overcome this and the increase in UKRI listed organisations will have the means to better attract and retain innovators and researchers. 

Further incentives for talent to use the Global Talent route are the absence of English proficiency, minimum salary and UK entity requirements, very few visa restrictions, and a shorter pathway to settlement.

Missing from the budget

The package is notable as much for its limits as for its contents. It improves selected routes at the top end of the labour market, but it does not amount to a comprehensive immigration strategy and leaves several major policy questions unresolved.  However, we can expect to see significant further announcements in the coming months as the government continues to develop its immigration strategies.

Key policy issues that were not touched upon in the budget include:

• Earned Settlement – the government's response to its consultation on proposed changes to settlement criteria (including increasing the baseline residence period required from five years to 10, 15, or 20 years) is expected before the end of this year.  Uncertainly has prevailed for nearly a year since the launch of the consultation and clarification is now urgently required to help inform decisions for individuals, families and businesses wishing to remain in/relocate to the UK.   
• Inward investment – despite rumours, there was no reference to a potential new route for high-net-worth individuals. There continues to be a significant visa-route gap for credible international HNW investors and business leaders who wish to relocate to the UK but do not fall within remaining work routes; Global Talent, Innovator Founder and Skilled Worker may assist some individuals, but none offer a thoughtfully constructed and low-red tape HNW visa option for capital holders to be able to relocate to the UK for the purpose of investing their money. We understand that policy options remain under consideration.
• Innovator Founder – the wider Budget introduces a new Founders’ Relief, expands access to scale-up finance through the British Business Bank, proposes improvements to existing investment schemes and repeatedly emphasises the ambition to make the UK one of the best places in the world to start and scale an innovative business. This needs to be matched by an ambition to provide a much-improved visa offering which incentivises overseas entrepreneurs to found their businesses in the UK rather than other jurisdictions. The Chancellor has played his part in improving fiscal incentives and the baton has now been passed to the UK Home Office to consider its policy in this area. The Migration Advisory Committee is expected to publish its self-commissioned report on the obstacles in talent routes in the next few months. 

Overall takeaway

The Budget marks a welcome change of emphasis, with immigration increasingly being treated as part of the Government’s wider strategy for growth, investment and innovation. The expanded measures for highly skilled workers, international graduates and innovative businesses are positive, particularly when viewed alongside the wider support announced for founders and internationally mobile talent.

There are, however, important gaps. This is a targeted package rather than a wider reform of the immigration system, and much of the detail remains to be worked through. If the ambition is to make the UK one of the best places to build, invest and scale, the immigration offer will ultimately need to match that ambition. Greater certainty on settlement, proportionate sponsorship costs and more workable routes for international founders and active investors would help turn these announcements into a genuinely coherent pro-growth immigration strategy. As always, the devil is in the detail and immigration lawyers will be poised to review the changes in Immigration Rules and policy as soon as they are published to determine how the Budget proposals can be useful to clients and put into play.