Level 2 Users Are Going: The Sponsor Licence Deadline to Fix Now

If your organisation holds a UK sponsor licence, check who can access its Sponsorship Management System (SMS). The Home Office is phasing out the Level 2 User role. Existing users must be converted to Level 1, if eligible and still needed, or have their accounts deactivated by 8 March 2027.

This is not simply an account tidy-up. Level 2 users may currently assign Certificates of Sponsorship (CoS) and report certain worker activity. If your business relies on them, you need to plan how those tasks will be covered after the role ends.

One terminology point: the current Home Office sponsor guidance refers to Level 1 and Level 2 SMS Users. “Level 1B” is not a newer name for an SMS role. This article uses the Home Office’s terminology.

What is changing, and when?

The Home Office’s updated sponsor guidance says sponsors could no longer appoint new Level 2 Users from 9 September 2026. Existing Level 2 Users may remain during the transition, but by 8 March 2027 a Level 1 User must either convert each eligible user who still needs access or deactivate the account. Any Level 2 accounts still in place after that date will be deactivated automatically.

Date	What sponsor licence holders need to know
9 September 2026	New Level 2 Users can no longer be appointed.
Now	Audit existing accounts and decide who needs continuing SMS access.
By 8 March 2027	Convert eligible users who still need access, or deactivate them.
After 8 March 2027	Remaining Level 2 accounts are automatically deactivated.

The practical deadline is 8 March, not the following day. Waiting until the last minute could leave too little time to check eligibility, arrange appropriate Level 1 cover and resolve access issues.

What can Level 2 Users do today?

Level 2 Users have more limited SMS permissions than Level 1 Users. Under the current guidance, they can create and assign CoS, and report worker activity relating to CoS they personally created and assigned, or that a Level 1 User transferred to them. They cannot report on CoS assigned by a Level 1 User unless the CoS has been transferred to them.

Level 1 Users have broader day-to-day responsibility for managing the licence through the SMS. Their functions include assigning CoS, requesting additional CoS allocation, managing SMS users, updating licence details and reporting relevant worker or organisational changes.

That distinction matters when planning a transition. A business should not assume it can simply remove a Level 2 account without checking which work depends on it, or that a particular user can be promoted without meeting the Level 1 requirements.

For the Home Office’s complete description of the roles and eligibility rules, see its sponsorship management roles guidance and sponsor guidance, Part 1.

What should SMS administrators do?

Start with a current list of every SMS user. For each person, record their access level, job or business function, whether they still need access and what sponsorship tasks they perform. Check that the list matches the accounts currently shown in the SMS.

Then make a decision for every Level 2 account:

1. Convert the user if they remain suitable and eligible

If a person still needs SMS access, check that they meet the Home Office’s Level 1 requirements before arranging a conversion. The sponsor must continue to have at least one eligible Level 1 User throughout the life of the licence. In the ordinary case, at least one must be an employee, director or partner in the sponsor organisation and a settled worker, subject to the exceptions in the guidance.

Additional Level 1 Users may be available in certain circumstances, including for an organisation providing HR services or a UK-based representative. But eligibility rules differ by role and appointment circumstances. Check them before deciding someone can take over.

2. Deactivate accounts that are no longer needed

If a user has left, changed responsibilities or no longer requires SMS access, plan to deactivate the account rather than retaining it “just in case”. Review the authorisation process too: the Authorising Officer remains responsible for SMS users’ activities.

3. Check agency staff carefully

The guidance says temporary staff supplied by an employment business and not employed by the sponsor are not eligible to be converted to Level 1. Their Level 2 accounts should be deactivated by the deadline. If that person currently handles CoS or reporting work, identify who will take over and how the work will be covered.

4. Review key personnel and cover

Check whether the people responsible for sponsorship remain in post and whether the business has appropriate cover for absence, departure or changes in responsibilities. The aim is not to give SMS access to as many people as possible. It is to retain enough suitable, eligible users to manage the licence reliably, with clear oversight and appropriate checks.

What could happen if you leave it too late?

When Level 2 accounts are deactivated, users who relied on those accounts will lose SMS access. If your organisation has not arranged sufficient Level 1 cover, this may cause operational problems: for example, delays in assigning a CoS or difficulty making a required report through the SMS.

The abolition of Level 2 is not, by itself, a reason to assume your licence will automatically be revoked. However, the underlying sponsor duties continue. Sponsors must maintain suitable key personnel and meet their reporting and other compliance obligations. A gap in access can become more serious if it contributes to missed reports, failures in sponsor duties or the loss of active Level 1 access.

The guidance specifically addresses what can happen if the process for inactive SMS accounts leaves a sponsor with no active Level 1 Users: the Home Office will suspend the licence and give the sponsor 28 days to nominate at least one eligible Level 1 User. If the sponsor does not do so, the Home Office will normally revoke the licence.

More broadly, sponsor guidance gives the Home Office powers to take compliance action where a sponsor fails, or is reasonably suspected of failing, to meet its duties. Depending on the circumstances, action may include a licence downgrade, suspension or revocation. The relevant issue is the sponsor’s actual compliance and circumstances, not simply the fact that Level 2 accounts are being phased out.

If you receive a revocation decision, there is generally no ordinary sponsor licence revocation appeal for the employer. The response to a particular decision depends on its facts and the procedure available; do not assume that an appeal or administrative review is available. Take advice promptly on the decision letter and any representations or legal challenge that may be appropriate.

Don’t confuse the Level 2 deadline with the 29 October update

The Home Office sponsor guidance also addresses changes coming into force on 29 October 2026 for some Minister of Religion and Religious Worker sponsorship matters, including the removal of the resident labour consideration for relevant applications and changes to financial requirements for workers not entitled to the National Minimum Wage.

These are separate changes from the Level 2 phase-out. They may be relevant to sponsors on those routes, but they do not alter the SMS transition deadline. Check the current route-specific guidance if your organisation sponsors religious workers.

A practical SMS transition checklist

Before 8 March 2027:

• List all SMS users and confirm their current access levels.
• Identify each Level 2 user and the duties that depend on their account.
• Confirm whether each person still needs SMS access.
• Check Level 1 eligibility before arranging a conversion.
• Deactivate accounts that are obsolete or ineligible for conversion.
• Review who is responsible for CoS assignment and worker reporting after the change.
• Check that key personnel remain suitable and that appropriate cover is available.
• Record decisions, approvals and account changes.
• Continue reviewing SMS messages and account details as part of your regular compliance routine.

For a wider review of SMS access, reporting, records and HR processes, see our Sponsor Licence Compliance: The New SMS Rules and Sponsor Licence Self-Audit Checklist. These cover broader compliance issues; this article focuses on the Level 2 transition and the practical steps to prepare for it.

Tyndel Solicitors advises employers on sponsor licence compliance, SMS processes and immigration matters. You can read more about our Immigration services.

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If your organisation needs advice on its sponsor licence, SMS access or an ongoing compliance concern, contact Tyndel Solicitors to discuss your circumstances. Call 0208 154 3131 or visit our Immigration service page to get in touch.