Business immigration updates for employers | July 2026

July has brought an important update for employers on the expansion of the right to work check regime, with the Government confirming that the changes will take effect from 1 October 2026. This is a key business immigration development for all employers, particularly those using agency workers, zero-hours workers, individual subcontractors, gig economy workers or other indirect labour models. The month has also seen discussion around the future of UK investment migration, following proposals for a new British Business Investment Visa designed to attract long-term investment into high-growth sectors of the UK economy.

Right to work checks: upcoming changes from 1 October 2026 – act now!

The Government has confirmed that changes extending the UK’s right to work check regime will take effect from 1 October 2026. The Home Office will continue to look first to the party with the direct contractual relationship with the worker, but where that party cannot be identified, or where the prescribed requirements have not been met (detailed below), the new regime allows liability to move upstream to another party in the contractual chain.

The Government has published a new draft employer's guide to right to work checks which sets out the expanded regime, a copy of which can be accessed here and a new draft Code of Practice on preventing illegal working, which can be accessed here. Going forward, both documents will need to be reviewed together to avoid inconsistencies arising. The reforms follow the consultation on extending the right to work scheme and will widen the regime beyond traditional contracts of employment to cover three new categories of working arrangements within scope, including:

• workers - such as casual workers, zero-hours workers or gig-workers who undertake the work themselves rather than running their own independent business;
• individual sub-contractors - an individual engaged by a contractor rather than directly by the end-user business, typically as part of a supply chain arrangement (e.g. a plumber subcontracted by a construction contractor to work on a building site); and
• online matching services – arrangements where individuals are engaged through digital platforms or apps that connect people who offer services, covering gig economy and platform-based arrangements e.g. taxi and food delivery services. If the platform matches workers with customers and takes a cut, it is likely an online matching service under the new regime.

The guidance makes it clear that the responsibility for carrying out right to work checks remains with the employer who has a direct contractual relationship with the individual, but the new provisions are targeted at contractual chains through which work or services are provided onwards to a third party, rather than organisations purchasing services for their own operations. In those situations, a new concept of "extended liability" is introduced under which civil penalty liability can extend beyond the employer in the direct contractual relationship to another person in a chain of contracts. As such, the practical question for employers is whether individuals are performing work personally, either directly or through a chain of contractual arrangements.

Businesses that outsource services or rely on multiple tiers of contractors should review their existing arrangements very carefully and assess which arrangements are in scope from 1 October 2026 for "extended liability". Compliance from 1 October 2026 can no longer be viewed solely as the responsibility of the direct employer. Civil penalties for illegal working can reach £45,000 per worker, for a first breach and £60,000 for a repeated breach per illegal worker, so the financial risk for businesses with complex labour supply chains will be significant.

The draft guidance confirms that this expanded scheme will apply in relation to individuals employed or engaged on or after 1 October 2026, however, it is not currently clear whether "extended liability" will be applied to existing contracts or only ones established on or after 1 October 2026. This is something we will monitor and update in any future bulletin.  Helpful checklists are provided on pages 42 (how to assess whether an arrangement may be in scope) and 48 (how extended liability in a chain of contracts will work) of the draft guidance, which should be considered and assessed by all employers.

Once a business has mapped out its working arrangements and identified which ones are in scope for the extended liability regime, in order to establish a statutory excuse against extended liability for payment of a civil penalty, they must be able to demonstrate that they have (1) complied with the three prescribed requirements set out below and (2) provided evidence of that compliance, if requested.

The draft Code of Practice and draft guidance currently state that the upstream party must put in place and evidence compliance with all 3 prescribed requirements, to establish a statutory excuse, before the work commences. A high-level overview of what this includes is:

1. Written statement and contractual framework: the relevant party must have a written statement and contractual framework that requires the direct employer/service provider to conduct right to work checks, prohibit unauthorised subcontracting unless authorised, permit compliance audits, and include enforcement provisions for illegal working (for example suspension or termination rights).
2. Substitution controls: where workers can send substitutes, the business must have processes in place before work starts to ensure that any substitute is identified and authorised, appropriate right to work checks are conducted on substitutes and records are maintained.
3. Identity verification systems: the business must maintain identity verification systems to confirm that the individual carrying out the work is the same person on whom a right to work check was conducted. The draft Code of Practice gives examples of potential controls, including identity cards, workplace passes, biometric systems, facial recognition technology including use of registered RtW DVSPs and periodic identity re-verification. The draft guide provides additional practical detail, including guidance on preventing impersonation, the use of facial recognition technology and registered digital verification providers, digital identity solutions for supply chains, and the evidence businesses should retain to demonstrate compliance.

Failure to meet any of these prescribed requirements may allow the Home Office to impose a civil penalty on a party higher up the contractual chain. The Government has said these changes are intended to address illegal working in modern labour market structures, including sectors such as construction, food delivery, beauty salons, courier services and warehousing.

The Government has also confirmed changes to the digital verification framework. Under the draft guidance, what were previously referred to as Identity Service Providers (IDSPs) are redefined as RtW DVSP and it will be mandatory, rather than merely recommended, for employers to choose from the OfDIA register. In addition, a new concept of ‘passive authentication’ will be introduced, permitting a RtW DVSP to verify an expired British or Irish passport, or Irish passport card, up to six months past its expiry date by checking the validity of the document’s chip, whereas the previous guidance treated an expired passport as unacceptable for a digital check and required a manual check instead. The Home Office has indicated that further guidance and support for employers will be provided, and practical guidance will be needed to clarify exactly how the extended liability framework will operate in practice. However, this doesn't leave employers with much time to prepare, especially over the summer holiday season.

For employers, the confirmation of the 1 October 2026 implementation date provides some welcome certainty, but the lead-in period is short. Businesses should begin mapping their labour arrangements now to identify which individuals and contractual relationships may fall within the scope of the extended liability regime. This will be particularly important for employers using agency workers, individual subcontractors, casual labour via a third party, platform workers, outsourced providers or other indirect labour models.

The announcement also provides some reassurance for businesses operating independent business arrangements. The draft guidance confirms that the extended regime will generally not apply where an individual is operating an independent business in their own name or through their own company and contracts directly with clients or customers for the provision of services. The draft guidance specifically excludes self-employed contractors and personal service companies from the right to work scheme (pages 15 and 16 of the draft guidance). However, the draft guide also emphasises that labels are not determinative. Whether an arrangement falls outside the regime will depend on the reality of how the work is supplied and performed in practice. Businesses relying on self-employed models should therefore continue to assess the substance of the arrangement and check whether there is a right of substitution (which will trigger the prescribed requirements of substitution controls and identity verification systems above) rather than relying solely on contractual terminology.

Practical steps for employers

Employers should act now to consider:

• auditing all categories of labour used by the business, including employees, workers, agency staff, self-employed contractors, individual subcontractors and gig/platform workers;
• identifying which arrangements may fall within the scope of the extended right to work regime from 1 October 2026;
• paying particular attention to supply chain arrangements in sectors such as construction and infrastructure, and reviewing onboarding and right to work processes where the business engages significant numbers of casual, zero-hours or gig economy workers;
• reviewing and amending contracts with agencies, subcontractors and labour suppliers to ensure right to work responsibilities, evidence requirements and indemnities are clearly addressed;
• checking whether current right to work processes can accommodate non-employee workers and individuals in supply chains;
• confirming whether any digital verification provider used by the business is Government-registered and able to support right to work checks;
• training HR and procurement teams on the extended requirements; and
• keeping a paper trail showing the checks, contractual protections and compliance steps taken, in case of Home Office scrutiny.

Businesses should not wait for final Home Office guidance before beginning preparations. While some practical details remain unclear, the direction of travel is clear: right to work compliance is moving beyond traditional employment relationships and into broader workforce and supply chain management, so act now to ensure your business is compliant and ready for 1 October 2026

Migration Advisory Committee (MAC) publishes its second stage review recommending the current Temporary Short List occupations reduce from 52 to 28 from the end of 2026

Following on from the MAC's first stage review published last October, where it considered that 82 occupations on the Government's new Temporary Shortage List (TSL) should progress to the MAC's second stage review, on 23 July 2026 the MAC published its second stage review, which can be accessed here. This is the first full assessment of which RQF Level 3-5 occupations should continue to have access to the Skilled Worker visa route, following the Government's decision to tighten the rules in July 2025 and increase the skill level to RQF Level 6 for new hires.

The overarching finding is that the MAC is recommending that of those 82 occupations that progressed, only 28 occupations should be added to the future TSL from 1 January 2027, and their duration should be limited to an initial 18-month period. This is a substantial reduction from the current 52 occupations listed on the current TSL. Access to the TSL was limited to occupations supported by workforce strategies, referred to in the MAC's review as "Jobs Plans", which set out how sectors intend to increase training, recruitment and make greater use of the domestic workforce. It appears that many sectors failed to provide sufficiently robust evidence for the MAC to rely upon to justify more occupations being retained. No occupations were considered to have a strong enough case for inclusion now and the next full review is not expected for another 3 years.

As listed in chapter 3.2 of the second stage report, the 28 occupations are (with a focus on sectors such as construction, engineering and infrastructure):

• Electrical and electronics technicians
• Engineering technicians
• Sheet metal workers
• Metal machining setters and setter-operators
• Metal working production and maintenance fitters
• Welding trades
• Boat and ship builders and repairers
• Planning, process and production technicians
• Metal plate workers, smiths, moulders and related occupations
• Electrical and electronic trades n.e.c. – Overhead Line Workers only
• Database administrators and web content technicians
• Data analysts
• Telecoms and related network installers and repairers
• Building and civil engineering technicians
• Ship and hovercraft officers
• Pipe fitters
• Electricians and electrical fitters
• Bricklayers
• Roofers, roof tilers and slaters
• Plumbers & heating and ventilating installers and repairers
• Carpenters and joiners
• Construction and building trades n.e.c. – Building envelope specialists, Curtain wall installers
• Plasterers
• Floorers and wall tilers
• Painters and decorators
• Construction and building trades supervisors
• Chemical and related process operatives
• CAD, drawing and architectural technicians

The MAC said these occupations were selected because the evidence for current or future shortages was considered plausible and a credible Jobs Plan was a prerequisite to TSL access. This recommendation is meant to result in a relatively small reduction in migration overall, with limited expected effects on public finances, economic growth or business confidence.

The MAC did not recommend separate additions for Scotland, Wales or Northern Ireland, concluding that there was insufficient evidence that labour shortages differed materially from the UK-wide picture. This review signals a much tougher environment for employers seeking to recruit overseas workers in medium-skilled roles.

Practical steps for sponsors

Sponsors should review their sponsored migrants in occupation codes that are not recommended to survive and should prepare for the possibility that sponsorship eligibility may end when the interim arrangements expire. Workforce planning and domestic skills investment therefore should remain a priority for businesses recruiting into mid-skill level roles into 2027 and beyond.

IPPR proposes new British Business Investment Visa

The Institute for Public Policy Research (“IPPR”) has published a report proposing a new British Business Investment Visa (“BBIV”) to replace the Tier 1 Investor route, which closed in 2022. The proposal is designed to address concerns that the previous investor route did not deliver sufficient economic benefit to the UK, while also reducing the money laundering and illicit finance risks historically associated with investment migration routes.

Under the proposal, applicants would be required to invest £5 million over the lifetime of the visa. This would be made up of £3 million upfront, followed by £1 million after two and a half years and a further £1 million after five years. The investment would be channelled through a pooled investment vehicle overseen by the British Business Bank, with funds directed towards innovative, high-growth and strategically important sectors of the UK economy.

The proposed BBIV would differ from the previous Tier 1 Investor route in several important respects. It would not provide a fast-track route to settlement or British citizenship, and applicants would still need to meet the same residency requirements as other migrants. The IPPR also proposes additional safeguards, including strict financial checks, a cap on applicant numbers and a dedicated anti-money laundering function to manage risk.

The IPPR estimates that a pilot scheme attracting around 100 applicants per year could generate approximately £425 million in annual investment and add up to £900 million to the UK economy, supporting around 4,000 jobs. However, this remains a policy proposal rather than a confirmed Government route.

Practical steps for businesses

This is not yet something individuals can apply for, but it is worth monitoring. The proposal sits alongside a broader policy trend towards using immigration routes to support investment, innovation and high-growth sectors. If taken forward, the route could become relevant for founders, investors, scale-ups and businesses seeking access to patient capital, particularly in sectors aligned with the Government’s industrial strategy.