How is the salary calculated for work permit ILR? Does £41,700 include bonus and allowances?

A salary section in a job offer letter can be divided into several lines, such as basic salary, bonus, allowances, and weekly working hours. When verifying the salary on the work permit, copy down each item separately, leaving a cell next to it to write "Can be counted?"

Are the work permit and ILR both looking at £41,700?

According to the current rules as of September 13, 2026, this article discusses the salary thresholds for Skilled Worker (skilled worker) and the path to permanent residency. £41,700 is a threshold, and it also needs to meet the going rate (the salary specified by the job and working hours), taking the higher one; those who meet other salary options or transitional arrangements may have different thresholds. The calculation starts from the guaranteed pre-tax basic salary, and the employee's own income tax, national insurance, and pension contributions are not excluded from this amount even if they reduce the take-home pay. The total compensation package in the job advertisement needs to be broken down, and the employer-paid pensions, insurance, and shares cannot be combined together. First confirm the applicable salary band, then determine the income items, to see how much is really missing.

Is it not considered as part of the contract?

Bonuses, overtime pay, and shift allowance are not included. According to the current "Immigration Rules" Appendix Skilled Worker SW 14.2(b), it is clearly stated that whether the payment is guaranteed or not makes no difference. Therefore, the statement that "contractually committed bonuses can count towards the threshold" is not valid.

Calculation example: Base salary £39,000 plus guaranteed bonus £3,000, the amount that can be counted is still £39,000, the difference from the standard level is £2,700.

I think that such employment plans should prioritize converting the bonus budget into guaranteed basic salary. The compensation structure should be implemented in the contract and actual payroll; merely changing the name of the bonus column is not enough.

Are all the London allowances also to be completely excluded?

Housing and living allowances are generally excluded. However, section 13.1 of the Home Office "Skilled Worker caseworker guidance" edition dated 3 August 2026 specifically mentions London weighting (London area allowance): it can be counted if the sponsor confirms that it will be paid, and tax, pension, and national insurance contributions are handled in the same way as for the basic salary. When assessing, personnel must confirm these conditions in writing item by item; monthly fixed payments that have already been taxed are not sufficient on their own to prove that all requirements are met.

This quota is not limited to existing Tier 2 (General) holders; current Skilled Worker applications that meet the criteria can also use it.

The old Tier 2 (General) has a transitional arrangement under SW 14.5(a): applicants must continuously hold the relevant work visa sponsorship, use the same sponsor as the previous one, and apply for renewal or settlement before December 1, 2026. The allowance must also be continuously paid during the period of the permit, and it applies to local settled employees in the same situation. This should be checked separately from the London subsidy criteria mentioned above.

Switch to part-time, or do another job?

Changing the main job to part-time, the standard rate of £41,700 will not be discounted according to working days; it should be based on the actual pre-tax annual salary of the part-time position, while the going rate will be calculated according to working hours.

"Guide to Sponsor a Skilled Worker" SK7.11 states that part-time work cannot be converted into full-time equivalent to meet the general threshold. Income from another job also cannot be added to the main job: Section 22.5 of the Case Handling Guidance clearly states that when applying for ILR, income from additional jobs is not counted; even if the second job has separate sponsorship, only one salary meeting the requirements can be selected, they cannot be combined. Both jobs are legal individually, but it does not mean that the income can be combined.

Please have the HR confirm, what should be written specifically?

Put the following items in the same confirmation.

Please have the HR department list the position code, weekly working hours, applicable salary grade, and occupational specified salary. Then list the basic salary, bonus, and subsidies item by item, and clearly indicate whether each item can be counted and the basis for it. The London allowance should be accompanied by confirmation of tax, pension, and national insurance treatment. Also check whether there are any loans repaid to the guarantor or affiliated entities, payments for business or visa costs, or investments made. SW 14.2A requires that applicable amounts be deducted from the salary and amortized over the guarantee period. Only extra benefits voluntarily chosen and unrelated to the above costs or investments can be exempted. These payment arrangements should be submitted to HR for calculation, not just verifying the annual salary figure on the first page of the contract.

[Data Source] Home Office Current Immigration Rules' Skilled Worker Appendix Salary Provisions; "Guidance on Assessing Skilled Worker Cases" Salary Assessment and Permanent Residency Salary Chapters; "Sponsorship Guide for Skilled Workers" Salary Calculation Chapter. This article is for reference only. For specific issues, please consult a licensed lawyer.

Welcome to leave a message and chat: In your pay slip, which income item do you find most uncertain whether it can be counted towards the threshold?

Dealing with a UK legal matter? JustiScript can help