The Home Office’s proposed “Earned Settlement” system is reshaping the pathway to Indefinite Leave to Remain (ILR).
And while the 10-year baseline has grabbed headlines, one of the most important — and least understood — components of the reform is how income will now determine someone’s eligibility for settlement.
For the first time, earnings will directly shorten or delay ILR, and in some cases, will determine whether someone qualifies at all.
But what exactly counts as income?
How will it be measured?
And what evidence will applicants need?
Here is a clear breakdown of what we know so far — and what is still unresolved.
1️⃣ Salary Will Become a Core Part of the Settlement Decision
Under the proposed framework, settlement will be based on four pillars:
- Character
- Integration
- Contribution
- Residence
Salary sits under the Contribution pillar — and the Home Office intends to use income as a measurable indicator of a migrant’s long-term economic value to the UK.
This means salary will not just be a requirement — it becomes a scoring factor that influences how long someone must live in the UK before qualifying for ILR.
2️⃣ The Baseline Income Requirement: Minimum £12,570 Per Year
To qualify for ILR at all, applicants must show they have earned at least:
£12,570 per year (gross taxable income), for 3–5 years
This is the same figure as the UK National Minimum Income Threshold and will likely be tied to HMRC taxable records, not self-certified income.
This baseline applies to:
- skilled workers
- dependants
- work visa holders
- almost all routes except those explicitly exempt (British family routes, BN(O) etc.)
Anyone earning consistently below £12,570 risks failing the Contribution requirement — even if they meet every other criterion.
3️⃣ Fast-Track Settlement for High Earners — But Only with Continuous Income
The consultation proposes income-based reductions:
£50,270+ for 3 consecutive years → 5 years off the settlement timeline
£125,140+ for 3 consecutive years → 7 years off
This means someone could go from a baseline of 10 years to as little as 3 years, depending on their earnings and other reductions.
But here’s the crucial detail:
Income must be continuous. Breaks reset the clock.
Breaks include:
- maternity leave
- parental leave
- switching jobs
- periods of unemployment
- self-employment fluctuations
- reduced hours
- extended unpaid leave
If earnings drop below the threshold for even one month, the 3-year qualifying period resets entirely.
This is one of the most challenging parts of the proposed system — especially for parents, graduates, part-time employees and self-employed professionals.
4️⃣ How Will the Home Office Measure Salary?
While the consultation has not finalised the exact mechanism, several indicators make the direction clear.
Salary will almost certainly be verified through:
- HMRC PAYE records
- Self-assessment tax returns (SA302)
- National Insurance contribution history
- Employer PAYE submissions
This means:
❌ No cash-in-hand income
❌ No unverifiable self-employment receipts
❌ No inflated employer “letters” without HMRC backing
The Home Office is moving toward automated income verification, similar to how they already check employers under the Skilled Worker route.
5️⃣ What About Bonuses? Overtime? Dividends? Self-Employment?
This is a key area where the consultation leaves questions open.
Based on how the UK handles earnings for other visas, here is the likely approach:
Bonuses & commission:
✔ Count only if reported to HMRC as taxable income
❌ Discretionary, irregular bonuses may not count toward the “continuous income” requirement
Overtime:
✔ Likely counts if included in taxable income
❌ May complicate consistency unless earnings stay above thresholds each month
Self-employment:
✔ Will rely on self-assessment returns
✔ May average income over 12 months
❌ Fluctuating income may make it difficult to maintain 3 consecutive qualifying years
Dividends (company directors):
⚠ Likely to be treated cautiously
⚠ Could be included if reported properly
❌ But not guaranteed under the Contribution rules
We will not know exact calculations until the final rules are published.
6️⃣ Will Salary Be Judged Individually or As a Household?
The proposed system makes it clear:
Each applicant is judged individually — even dependants.
This means:
- A spouse earning £60k can gain reductions
- A dependent child turning 18 must meet adult income requirements
- A low-earning partner may have a longer route than the main applicant
Household income will not be considered.
7️⃣ What About People Already in the UK?
The proposal states:
The new rules may apply to everyone who has not yet received ILR — even if they are already on a 5-year route.
This means income will be assessed retroactively for many people already working toward ILR today.
Transitional protections might be given, but only:
- for “borderline cases,” or
- in “exceptional circumstances”
The vast majority of migrants may still fall under the new system.
8️⃣ What Applicants Should Do Now
Even though the rules are not final, the direction is unmistakable.
✔ Keep income stable and well-documented
✔ Avoid gaps in employment where possible
✔ Make sure all earnings are correctly reported to HMRC
✔ If self-employed, consider stabilising income sources
✔ Maintain continuous employment if aiming for fast-track reduction
✔ Start tracking income month-by-month to ensure consistency
The Home Office is moving toward a data-verified, contribution-based settlement system, and preparation now will make a significant difference later.
Final Thoughts
Salary has always mattered in UK immigration — but under the new settlement system, it will become a central factor in determining who the UK allows to settle permanently.
This is no longer just a 10-year timeline change.
It is a complete shift toward a performance-based settlement model, where economic contribution is quantified, verified, and directly tied to how long someone must wait for ILR.
Migrants, employers, and legal advisers should begin preparing now — because once the rules come into force (likely April 2026), income history will matter just as much as immigration history.