ILR to be extended from five years to 10
Proposed changes to the UK’s immigration system are leading businesses across sectors, including mortgage and banking, to re-evaluate hiring strategies and long-term planning, with concerns focused on higher costs and delayed access to permanent residency for foreign workers.
The UK government has announced plans to extend the minimum stay required for Indefinite Leave to Remain (ILR) from five to 10 years.
The change, which remains under review and has not yet been finalised, would affect new and existing foreign nationals seeking settled status. According to Bloomberg, immigration officials are considering whether the rule would apply retroactively.
Employers that rely on international hires, including those in finance, such as insurance, healthcare, pharmaceuticals, and hospitality, face operational challenges if the proposed policy takes effect.
The insurance industry, in particular, is watching closely. The Lloyd’s Market Association expects a shortfall of 260,000 skilled workers by 2035 due to retirements and sees access to long-term, family-compatible visas as critical.
“It’s just another burden and it’s clamping down on using highly skilled individuals,” said Richard Harris, chief legal officer at Robert Walters Group.
In social care, the planned rollback of an exemption allowing overseas recruitment - introduced in 2022 - could come into force within months. Industry groups, including Care England, warn that care homes already dealing with funding constraints may struggle to fill positions domestically. The government has said that employers can continue hiring migrants already in the UK until 2028.
Costs are another concern. Employers currently pay a £1,000 annual immigration skills charge per sponsored worker. With a 10-year path to ILR, that cost would double for each employee.
According to Bloomberg, small- and medium-sized firms are particularly vulnerable to these added expenses, with limited administrative capacity to manage prolonged sponsorship requirements.
In financial services, professionals say the new rules are influencing their career and life decisions. One London-based banker told Bloomberg the change could cost him an additional £40,000 a year in university tuition for his child, who will no longer qualify for domestic rates. Another employee at a global investment bank said she would have reconsidered relocating from Asia had she known permanent residency would take a decade.
“We’ve got people that are in the UK who are coming to us and saying, ‘I’ve been in the UK for three and a half years, I’ve made it my home, my kids are in school, I pay my taxes, I want to buy a house. But I can’t now because I don’t know if I’m going to be able to get a mortgage in five years’ time if I’m going to have to wait another six, seven years for ILR,’” said Seema Farazi, global immigration leader for government affairs and financial services at EY.
A major British multinational is forecasting higher costs for relocating staff, a person familiar with the matter told Bloomberg, although the company does not plan to formally contest the change.
Legal experts say clients are increasingly concerned about the uncertainty of the UK’s immigration landscape. “The white paper itself is very broad. It’s quite all encompassing,” immigration barrister Catherine Taroni told Bloomberg.
The government has said some workers may still qualify for ILR sooner based on yet-to-be-defined criteria, potentially tied to economic contribution.
The Reform party’s rising influence in recent local elections has placed pressure on the government to limit net migration, which quadrupled between 2019 and 2023. Officials say the trend is now declining due to fewer international students and tighter post-Brexit rules for EU citizens.
As industries prepare for possible implementation, many are weighing the long-term implications.
Will the ten-year ILR requirement affect the UK’s ability to attract international talent and maintain a competitive workforce? Share your views in the comments.
