United Kingdom · immigration

How to Convert a Level 2 User to Level 1: UK Sponsor Licence Guide

Under the latest Home Office guidance, UK sponsors can no longer appoint new Level 2 Users, and existing Level 2 accounts must be upgraded or deactivated by 8 March 2027. Failing to manage this transition properly can leave your business with zero active SMS users, triggering immediate licence suspension. This guide explains how to audit your staff, request Level 1 access, and maintain compliance.

The Phase-Out of Level 2 Users: What the UK Law Says

The UK Home Office (UKVI) has initiated a major overhaul of the Sponsor Management System (SMS). Under Version 08/26 of the Sponsor Guidance for Worker and Temporary Worker routes (published on 28 August 2026), the Level 2 User role is being phased out entirely. Since 9 September 2026, sponsors in the United Kingdom have been banned from appointing new Level 2 Users. Furthermore, all existing Level 2 Users must be either upgraded to Level 1 status or completely deactivated by 8 March 2027.

This regulatory shift is compounded by the rollout of mandatory Multi-Factor Authentication (MFA) under SMS Manual 13, which commenced on 3 September 2026. This means the Home Office is tightening security and placing greater scrutiny on sponsor governance. If your business operates without a clear plan, or if your only Level 1 User leaves or becomes inactive (not logging in for 12 months), the Home Office will deactivate the account. If that deactivation leaves you with no active Level 1 Users, your sponsor licence will be suspended for 28 days and normally revoked, severely disrupting your ability to employ foreign workers.

The SMS Upgrading Process: Navigating the System

Many HR professionals assume that 'converting' a user is a simple case of editing an existing profile on the SMS. However, under SMS Manual 2, you cannot use the 'Amend' function to change a user's access level. Instead, an existing Level 1 User must submit a fresh 'Request level 1 user' application for that individual, followed by a manual deactivation of their Level 2 account once the upgrade is approved. This request is not instantly approved; UKVI manually reviews Level 1 appointments to ensure the nominee meets strict suitability criteria.

You must also ensure that the person being upgraded is legally eligible for Level 1 status under section L4 of the Sponsor Guidance. Level 1 Users must be direct employees, directors, partners, or qualified UK-based legal representatives. Temporary agency workers supplied by an employment business are strictly barred from being Level 1 Users. If you currently rely on agency staff as Level 2 Users, you cannot convert them; their accounts must be deactivated before the 8 March 2027 deadline.

Proactive Compliance and How Caunsel Helps

Navigating UKVI's constant administrative shifts can make business sponsors feel trapped by red tape. Between managing mandatory MFA details (such as aligning the user's Date of Birth and personal mobile number exactly with SMS records) and racing against the deactivation deadline, a single clerical mistake can lock your HR team out of the portal. Proactive preparation is your best defense against having your recruitment pipelines frozen by a sudden licence suspension.

You do not have to handle these complex compliance requirements alone. While Caunsel is not a law firm and cannot file applications on your behalf, you can use the Caunsel platform to research specific UK immigration rules, store and organize your SMS audit documents in a secure digital case file, or connect directly with an independent immigration solicitor to review your key personnel structures.

Steps

• Audit your key personnel and separate your SMS users into direct employees, external legal representatives, and agency-supplied staff to determine who is eligible for a Level 1 upgrade.
• Have an existing, active Level 1 User log into the SMS using their credentials and mandatory Multi-Factor Authentication passcode.
• Navigate to 'Licence summary, applications and services', select 'Manage Level 1 and 2 users', and click 'Request level 1 user'.
• Enter the eligible user's full name, personal email, mobile number, and date of birth—ensuring these details perfectly match their HR records to avoid MFA login lockouts—and submit the request for UKVI manual review.
• Monitor the status of your request on the SMS; once it transitions from 'Requested' to 'Active', use the 'Manage Level 1 and 2 users' menu to select the old Level 2 profile and click 'Deactivate user' to complete the transition.

Common mistakes

• Using the 'Amend' function on the SMS to try and change a user's level, which will be automatically rejected by the system.
• Attempting to convert temporary agency staff or external recruitment consultants who do not meet the strict employee or partner eligibility rules for Level 1 Users.
• Waiting until the 8 March 2027 deadline to submit Level 1 requests, which leaves your business vulnerable to system backlogs and manual review delays by UKVI.
• Failing to check that the registered Level 1 User's date of birth and mobile number are perfectly accurate on the SMS before MFA is rolled out, leading to immediate account lockout.

Questions people ask

Can a Level 2 User request their own upgrade to Level 1?

No. Level 2 Users have restricted permissions and cannot access the 'Licence summary, applications and services' menu required to request new users. Only an existing active Level 1 User can request a new Level 1 User account.

What should we do if we currently have no active Level 1 Users left to submit the request?

If your only Level 1 User has left the company or is locked out, you cannot use the SMS to make changes. You must urgently download, fill out, and submit the paper-based 'Sponsor change of circumstances form' on GOV.UK to nominate a replacement Level 1 User.

Are there penalties if we do not upgrade our Level 2 Users by 8 March 2027?

Yes. After 8 March 2027, the Home Office will automatically deactivate all remaining Level 2 User accounts. If this deactivation leaves your company with zero active Level 1 Users, UKVI will suspend your licence, giving you only 28 days to appoint a replacement before initiating full revocation.

General information only, last updated 2026-10-05. Caunsel is not a law firm and does not practise law. AI answers and this guide are not legal advice. Verify filings, deadlines, and statutes with a licensed lawyer in United Kingdom.