Assessing the Home Office’s Earned Settlement Plans and Their Fiscal Focus
On 20 November, the Home Office opened the ‘A Fairer Pathway to Settlement’, a new consultation on the Home Office’s proposals for a new ‘earned’ settlement model. For an overview of the proposed changes, please see this article prepared by my colleague Irfan Ali.
The key message for this consultation is settlement is not a right, it must be earnt, earnt via contributions to the UK. Whilst the Home Office has suggested volunteering and certain public services may serve as contribution, it is clear the key metric to be measured here is fiscal in nature. With the simplest reductions to the baseline period to reach settlement revolving around existing tax bands meaning those earning over £125,140 stand to benefit the most.
The Reductions
At a minimum, eligible applicants must have annual taxable earnings above £12,570 for at least 3 to 5 years, or an alternate amount of income, to apply for settlement. There has been no mention of what the source of earnings or ‘alternate amount’ may look like, however Appendix FM may give some indication with categories ranging from salaried and non-salaried employment to non-employment and dividend income. Not including any further factors, such an individual may be eligible for settlement after 10 years.
Those earning a taxable income of £50,270 for 3 years immediately prior to applying for settlement, may be eligible for a ‘reduction’ of 5 years to the minimum baseline. Whilst phrased as a reduction, in reality 5 years to settlement is the standard time to reach Indefinite Leave to Remain under the current rules. In the financial year 2023/24, according to the Migration Observatory, Skilled Workers received median annual earnings of £56,600, suggesting many Skilled Workers may be eligible for settlement after 5 years. However, Global Business Mobility workers received median annual earnings of £47,900, whilst Health and Care Workers received only £30,900. Despite these two visa groups having contributed nearly £700 million in Income Tax in 2023/24, these contributions would be deemed insufficient to qualify for a ‘reduction’ in the years to reach settlement.
Interestingly, high-skilled jobs such as Accountants and Architects have minimum income requirements of £49,200 and £47,600 respectively, suggesting individuals even in highly technical employment may not benefit from the 5-year route to settlement. One possible benefit, however, is that an individual only needs to be earning this required amount for the 3 years prior to settlement, suggesting that someone earning £40,000 for 2 years, but then £60,000 for the next 3 years, should be eligible for settlement. Yet any lapse in earnings above the threshold could prove disastrous.
The final tier and most significant benefit is reserved for those earning taxable income of £125,140 for 3 years immediately prior to applying for settlement, with a potential reduction of 7 years from the baseline. Whilst attractive on paper, according to the Institute for Fiscal Studies, only 1% of all income taxpayers in the UK receive such an income, the majority of who are male and based in London, and thus may have a disproportionate impact both geographically and on gender. Such a benefit has likely been proposed in an effort to make the UK more attractive to high-net worth individuals and organisations, whether such a proposal will outweigh those listed in the 2025 Budget remains to be seen.
Of particular note, which we will unpack more in a further article, is that the consultation has proposed a dependent’s qualifying period could now be calculated separately from their ‘sponsor’, according to their own attributes and circumstances. Thus, meaning where an individual’s partner is earning in excess of £125,140 and may be able to reach settlement in 3 years, if the individual themselves are not working they may be unable to settle at all. Perhaps forcing migrants to wait for their partners to settle, and then switch onto the Partner route, costing further in visa and potentially legal fees. Additionally, there are no clear provisions for individuals on maternity leave or with long-term illness/disabilities to be exempt from this requirement, only a brief mention in the Consultation Questions in Annex B.
The Increases
The Home Office’s focus on fiscal contribution goes both ways, whilst someone paying into the system may stand to settle faster, someone withdrawing may expect a far longer wait.
A potential applicant that accesses public funds for less than 12 months during the duration to settlement may see 5 years added onto their baseline period. Whilst accessing public funds for more than 12 months means a hefty 10-year increase.
Such proposals have caused concern within the Immigration community, especially when considering the situations where a migrant may have access to public funds. The majority of visas contain a condition stating ‘no recourse to public funds’, such a condition may be waived in exceptional circumstances such as for those under humanitarian protection, granted leave under the Ukrainian Scheme or survivors of modern-day slavery. The new proposals could see such individuals having to wait almost up to 20 years to be able to settle. Whilst the consultation aims to consider ‘vulnerable groups’ as potentially being exempt from the proposed changes, it is unclear how broad these groups may be, and whether further stringent evidential requirements may be in place in order to qualify for any exemption.
Moreover, there are fears such proposals will encourage individuals to live in destitution, rather than access the care they truly need. A Guardian article has already reported a low-paid carer cancelling disability benefits for their 8-year old autistic daughter, and being forced to increase their working hours to a colossal 60 hours per week, rendering any further reductions to the baseline period via volunteering a near impossibility.
Summary
The proposals in the Earned Settlement Consultation have triggered significant discussion and debate from Immigration practitioners, migrants and the general public alike. However, it is worth remembering these are still just proposals, with the consultation seeking further information and ideas, the true form of what ‘Earned Settlement’ will take remains to be seen. Yet with multiple varying reductions and increases, earning bands and contributions, what seems certain is an already complicated system is set to become even more so.
If you are concerned how these proposals may affect you, or wish assistance in applying for settlement, please do not hesitate to contact us at immigration@irwinmitchell.com or on 0370 150 100 where we would be glad to discuss your case further.
