# Earned Settlement: British ILR in Three, Five or Ten Years

> The UK earned settlement reform: a 10-year baseline, reductions at £50,270 and £125,140, talent routes, and the rules that actually apply in August 2026.

Author: Ksenia Voronova — Lawyer, Family Office (https://wiki.private.law/en/authors/voronova)
Last modified: 2026-08-21T15:11:00.000Z
Canonical: https://wiki.private.law/en/uk-earned-settlement
Topics: migration
Jurisdictions: uk
Product tags: residence-permit, permanent-residence, relocation, tax-regime
Semantic tags: residence-permit, permanent-residence, relocation, tax-regime

---

## What is happening: the reform is proposed, but not in force

On 20 November 2025 the Home Office published its [statement and consultation "A Fairer Pathway to Settlement"](https://www.gov.uk/government/consultations/earned-settlement/a-fairer-pathway-to-settlement-statement-and-accompanying-consultation-on-earned-settlement-accessible) — the earned settlement model, under which indefinite leave to remain \(ILR\) stops being the automatic consequence of years lived in the country and starts to depend on earnings, language, good character and the absence of debts to the state. The consultation ran for twelve weeks and closed at 23:59 on 12 February 2026. According to the Home Office's official answer to a parliamentary question on 8 June 2026, it drew "over 200,000 responses" — an unprecedented volume for an immigration consultation.

As at 20 August 2026 there is no final text of the rules. The consultation page on [gov.uk](http://gov.uk/) still carries the status "We are analysing your feedback"; neither the government response nor the economic or equality impact assessments have been published. That is not a formality: those are precisely the documents that will reveal the definitions — what counts as income, how people already in the country will be treated, and which categories will be carved out. Until they exist, "British settlement in three years" is a proposal, not a rule.

The practical planning point: the timescales in force today are the old timescales. Skilled Worker still reaches ILR after five continuous years \(SW 21.1\), Global Talent with an exceptional talent endorsement after three \(GT 11.1\), exceptional promise from Arts Council England or Tech Nation after five \(GT 11.2\), and Innovator Founder after three \(INNF 18.1\). None of this has been repealed.

## Settlement and citizenship: why "a passport in three years" is inaccurate

The commonest error in popular retellings of the reform is to conflate two statuses. Earned settlement governs ILR: the indefinite right to live and work in the United Kingdom without visa extensions and without a sponsor. It is not citizenship and not a passport.

Naturalisation is a separate procedure under the British Nationality Act 1981 with its own qualifying period. Under the [rules currently on gov.uk](https://www.gov.uk/apply-citizenship-indefinite-leave-to-remain), an applicant must have lived in the United Kingdom for five years before applying, have held ILR \(or settled status\) for at least 12 months at the date of application, not have exceeded 450 days of absence over the five years and 90 days over the last 12 months, pass Life in the UK, prove their English, satisfy the good character test and declare an intention to remain. The twelve-month wait after ILR does not apply to spouses of British citizens — they may apply immediately — but the five-year residence requirement stands.

Hence the arithmetic. Even if the accelerated track works as proposed and a high earner obtains ILR after three years, at least two more years to naturalisation remain: the five-year residence requirement does not go away, and by that point the 12 months since ILR will already have elapsed. The realistic horizon for a passport is five years from arrival, not three. The white paper ["Restoring Control over the Immigration System" \(CP 1326, May 2025\)](https://assets.publishing.service.gov.uk/media/6821aec3f16c0654b19060ac/restoring-control-over-the-immigration-system-white-paper.pdf) did promise a separate earned citizenship reform synchronised with settlement. It would require changes to primary legislation, not only to the Immigration Rules, and as at August 2026 no bill has been introduced. So the naturalisation requirements today are the old ones — though they too are in question over a horizon of a few years.

## The scale: baseline, reductions, extensions

The model is built as arithmetic around a baseline. The qualifying period for most routes rises from 5 to 10 years. Only one reduction applies — the largest available; reductions do not stack. Extensions take priority over reductions.

| Category | Condition | Effect |
| --- | --- | --- |
| Baseline | Most work and family routes | 10 years |
| Baseline \(under discussion\) | Workers below RQF 6, including Health and Care | 15 years |
| Baseline | Refugees granted status in the United Kingdom | 20 years |
| Baseline | People resettled under official schemes | 10 years |
| Unchanged | Family of British citizens and BN\(O\) holders from Hong Kong | 5 years |
| Reduction | Taxable income of £125,140 or more for 3 years | minus 7 years \(ILR after 3 years\) |
| Reduction | 3 continuous years on Global Talent or Innovator Founder | minus 7 years \(ILR after 3 years\) |
| Reduction | Taxable income of £50,270 or more for the 3 years immediately before the application | minus 5 years \(ILR after 5 years\) |
| Reduction | 5 years in the public sector in an RQF 6+ role | minus 5 years |
| Reduction | Family member of a British citizen | minus 5 years |
| Reduction | Volunteering and work in the local community | minus 3–5 years |
| Reduction | English at C1 level | minus 1 year |
| Extension | Receipt of public funds for less than 12 months | plus 5 years |
| Extension | Receipt of public funds for 12 months or more | plus 10 years |
| Extension | Illegal entry, including arrival by small boat | up to plus 20 years |
| Extension | Overstaying by 6 months or more, or entry on a visitor visa | up to plus 20 years |

On top of the scale sits a mandatory minimum, without which the reductions are meaningless: annual earnings above £12,570 for between 3 and 5 years \(the exact period was put out to consultation\), English at B2, a pass in Life in the UK, no outstanding debt to the NHS, HMRC or other public bodies, no live litigation against the state, and good character requirements.

## Why £50,270 and £125,140 are tax bands, not salary benchmarks

Neither figure comes from the labour market; both come from the income tax system. £50,270 is the point at which the 40% higher rate begins; £125,140 is the start of the 45% additional rate; £12,570 is the personal allowance and the National Insurance threshold. Under [HMRC's rates in force for the 2026/27 tax year](https://www.gov.uk/income-tax-rates) \(6 April 2026 to 5 April 2027\) all three figures are unchanged, and they are frozen until at least the 2030/31 tax year.

The Home Office logic is transparent: an applicant paying at the top rate is treated as a net contributor to the budget, and the qualifying period is shortened accordingly. The House of Commons Home Affairs Committee criticised that logic in its report ["Earned Settlement: Examining the Government's proposed reforms" of 13 March 2026](https://publications.parliament.uk/pa/cm5901/cmselect/cmhaff/1409/report.html): the tax thresholds were called a convenient but so far unevidenced basis for measuring contribution, and the Committee recommended handing the calculation to the Migration Advisory Committee. Separately, the consultation notes that the thresholds will not automatically track future changes to the tax system — so the link to the tax bands is a one-off, not a dynamic one.

An important planning detail: for the five-year reduction the consultation requires £50,270 across the three years immediately preceding the settlement application. A career break, parental leave, a year on a start-up without a salary — and the three-year window breaks.

## What counts as income: the model's central uncertainty

This is where popular retellings run ahead of the source. The consultation uses the term "taxable income", and verification runs on HMRC data. The document expressly allows for income unrelated to employment to count — rental receipts are given as an example. At the same time the Home Office notes a practical problem of its own: information on income outside PAYE reaches HMRC's systems less promptly than payroll data.

What the consultation does not contain is separate treatment of bonuses, share options, salary sacrifice, foreign earnings and benefits in kind. Those questions remain open, and practitioners point to them unanimously as the principal gap. For a banker, a consultant or a founder holding equity this is not an academic argument: if the final rules reduce the calculation to base salary through PAYE, someone on £95,000 with a £60,000 bonus will not reach the additional rate on the Home Office's criteria, even though on their tax return they plainly do. If instead the figure taken is the HMRC record of total taxable income, the picture reverses. The difference is four years of waiting for settlement, and it will be resolved in a document that, as at 20 August 2026, does not exist.

The sensible line until the final text appears: do not rebuild your remuneration structure around a rule that has not been written, but do preserve the documentary trail — P60s, Self Assessment returns and PAYE statements for every year of presence.

## Individual assessment, not the household

The model assesses every applicant separately, including adult dependants: they qualify on their own circumstances, not on the family's combined income. The House of Commons committee called this a source of "perverse outcomes" \(paragraph 30 of the report\) and gave a vivid example at paragraph 27: two parents each earning £52,000 both reach the five-year route, whereas a family in which one earns £30,000 and the other £74,000 pays more into the budget, yet the lower-earning spouse faces ten years. The Committee added that the approach devalues the contribution of whichever partner took on more of the childcare, will predictably fall hardest on women, and may deter a high earner faced with waiting for a spouse's settlement.

The Committee's recommendation was to calculate income-based reductions at household level. The government has not responded: the deadline expired on 13 May 2026. On 23 June 2026 the House of Lords Justice and Home Affairs Committee published a separate report calling retrospective application of the changes "manifestly unfair" and warning that a mandatory income requirement would trap those on parental leave, those caring for relatives and those with disabilities.

For a family the conclusion is simple: the calculation runs passport by passport, and family members may end up on different settlement timetables. In relocation planning that changes not only the visa strategy but also the question of which spouse holds which assets and who reaches the status that opens the door to naturalisation first.

> ⚠️ The main trap is to assume the accelerated track already exists and to plan around it. As at 20 August 2026 not a single statement of changes to the Immigration Rules on earned settlement has been laid, the government response and impact assessments are unpublished, and in March 2026 the Home Secretary publicly confirmed that the changes will apply retrospectively to those already in the country without ILR. No transitional regime has been announced — both Houses have called for one, but not a single recommendation has been accepted. Anyone reaching the five-year mark in the coming months is directly exposed: applying under the rules while they still apply is more rational than waiting for "your" category of reduction.

## What has already changed: English at B2 from 26 March 2027

One part of the future architecture has already become law — and it is worth separating from the proposal. [Statement of changes HC 1691 of 5 March 2026](https://www.gov.uk/government/collections/immigration-rules-statement-of-changes) raises the language requirement for settlement from B1 to B2 in speaking and listening with effect from 26 March 2027. The change covers the work routes — Skilled Worker, Global Talent, Scale-up, Innovator Founder, Minister of Religion, Representative of an Overseas Business, UK Ancestry — as well as partners of British citizens and the ten-year long residence and private life routes. It applies to the main applicant, a dependent partner and dependent children over 18; the exemptions for nationals of majority English-speaking countries, holders of UK degrees and those aged over 65 or under 18 remain. Skilled Worker and Scale-up applicants who first applied before 8 January 2026 may still extend on B1, but will need a fresh certificate at the level required for settlement.

The next statement of changes, HC 259 of 9 July 2026, in force from 30 July, does not touch settlement in substance: it deals with family routes, asylum procedures, deportation and minor technical amendments to Appendix ECAA and Appendix Statelessness.

## How the reform maps onto the tax perimeter

For incoming capital the main consequence lies not in the scale itself but in the fact that the immigration and tax calendars have stopped coinciding.

Since 6 April 2025 the non-dom regime and the remittance basis have been abolished. They were replaced by the [FIG regime](https://wiki.private.law/en/uk-fig-regime) — relief for foreign income and gains for the first four tax years of residence, provided the applicant was not UK tax resident in the ten preceding tax years. Inheritance tax moved from domicile to residence: long-term resident status arises on residence in ten of the previous twenty tax years and brings worldwide assets into the IHT perimeter. After departure the "tail" runs from three years where residence lasted 10–13 years, growing by a year for each further year of presence, up to a maximum of ten.

Now overlay the immigration scale. The four FIG years end before the ten-year baseline for settlement arrives — and in the interval a person bears full taxation of worldwide income while holding neither status nor freedom from a sponsor. By year ten, when the baseline scale first opens the door to ILR, the long-term resident threshold for IHT is triggered at the same moment: settlement and worldwide inheritance tax land in the same year. Under the old five-year period, half a decade for restructuring lay between those two events.

There is a subtler conflict too. The profile that is optimal for FIG is minimal UK-source income and life on foreign capital. The profile that earns a shorter settlement period is the opposite: £125,140 of taxable income three years running. The two cannot be optimised at once: reaching the accelerated track means deliberately generating exactly the UK tax base that FIG protects against. That is a management decision, not a technical one, and taking it before the final rules are published is premature.

## Common mistakes

The first is to count a bonus towards the threshold. Until the definition of income is published, any calculation along the lines of "my package is £140,000, so I am on the three-year track" has no basis in the text. That basis will appear only in the final rules.

The second is to plan naturalisation from the date of arrival. The accelerated track leads to ILR, not to a passport; after ILR there remain the five-year residence requirement, the absence limits \(450 days over five years and 90 over the last year\) and, for those who are not spouses of British citizens, 12 months holding ILR. Long postings abroad that do no harm to ILR can destroy naturalisation.

The third is to ignore the requirement to have no debts. An unpaid NHS invoice, a dispute with HMRC, an unrecovered benefit overpayment — under the model these are blocking conditions, not technical details, and such loose ends need clearing years before the application.

The fourth is to underestimate B2. This is settled law from 26 March 2027, not part of the proposal, and it reaches partners and adult dependent children — something families tend to remember at the last moment.

The fifth is to treat status as unconditional. ILR is lost after more than two consecutive years outside the country; for anyone planning to [wind down a UK presence](https://wiki.private.law/en/uk-leaving) that is a separate calculation alongside the tax tail.

> 🍓 As at 20 August 2026 earned settlement is a proposal, not law in force: the consultation closed on 12 February 2026 with over 200,000 responses, the government response and impact assessments are unpublished, no statement of changes on the substance of the reform has been laid, and the implementation target has slipped from April to autumn 2026. Right now the old periods apply: 5 years for Skilled Worker \(SW 21.1\), 3 years for Global Talent exceptional talent \(GT 11.1\), 5 years for exceptional promise \(GT 11.2\), 3 years for Innovator Founder \(INNF 18.1\). Under the proposed model the baseline rises to 10 years, while the "minus 7" reduction preserves the three-year period for the talent routes and extends it to those who have held taxable income of £125,140 or more for three years. Three things do not change in any scenario: the accelerated track leads to ILR, not citizenship; assessment is person by person, not family by family; and a definition of income does not yet exist.

## Q&A

### **Can I already apply for ILR after three years on a high income**

No. The income-based accelerated track is part of a proposal that has not been written into the Immigration Rules. A three-year period is available today only under the existing rules of specific routes: Global Talent with an exceptional talent endorsement \(GT 11.1\) and Innovator Founder \(INNF 18.1\). Income level has no bearing on those periods.

### **Does accelerated settlement deliver a British passport in three years**

No. Earned settlement concerns ILR. Naturalisation is a separate procedure: five years of residence in the United Kingdom, at least 12 months holding ILR at the date of application \(not required for spouses of British citizens\), no more than 450 days of absence over five years and 90 over the last 12 months, Life in the UK, English and good character. Even with ILR in year three, a passport is realistically no earlier than year five.

### **Will bonuses and share options count towards the £125,140 threshold**

Unknown. The consultation uses the term "taxable income" verified against HMRC data and expressly allows non-employment income, such as rent, to count, but contains no separate rule on bonuses, share options, salary sacrifice or benefits in kind. The definition will appear only in the final text of the rules.

### **Are those already living in the United Kingdom protected on the old timescales**

As at 20 August 2026, no. In March 2026 the Home Secretary confirmed retrospective application to those who have not yet obtained ILR. The Commons committee called for transitional measures and the Lords committee on 23 June 2026 called retrospectivity "manifestly unfair", but none of the recommendations has been accepted and no government response has been published.

### **Is spouses' income counted together**

No. The model assesses each applicant individually, adult dependants included. The Commons committee recommended moving to household-level assessment, noting that the current approach produces perverse outcomes, but the recommendation has not been accepted. In practice this means spouses in one family may end up on different settlement timetables.

### **What should someone approaching the five-year mark in the coming months do**

Check readiness to apply under the rules in force and do not delay: the reform is billed as retrospective, the implementation target is autumn 2026, and no transitional regime has been announced. Factor in separately the already enacted rise in the language requirement to B2 from 26 March 2027 — it will reach a partner and adult dependent children too.

---

## FAQ

### Can I already apply for ILR after three years on a high income

No. The income-based accelerated track is part of a proposal that has not been written into the Immigration Rules. A three-year period is available today only under the existing rules of specific routes: Global Talent with an exceptional talent endorsement (GT 11.1) and Innovator Founder (INNF 18.1). Income level has no bearing on those periods.

### Does accelerated settlement deliver a British passport in three years

No. Earned settlement concerns ILR. Naturalisation is a separate procedure: five years of residence in the United Kingdom, at least 12 months holding ILR at the date of application (not required for spouses of British citizens), no more than 450 days of absence over five years and 90 over the last 12 months, Life in the UK, English and good character. Even with ILR in year three, a passport is realistically no earlier than year five.

### Will bonuses and share options count towards the £125,140 threshold

Unknown. The consultation uses the term "taxable income" verified against HMRC data and expressly allows non-employment income, such as rent, to count, but contains no separate rule on bonuses, share options, salary sacrifice or benefits in kind. The definition will appear only in the final text of the rules.

### Are those already living in the United Kingdom protected on the old timescales

As at 20 August 2026, no. In March 2026 the Home Secretary confirmed retrospective application to those who have not yet obtained ILR. The Commons committee called for transitional measures and the Lords committee on 23 June 2026 called retrospectivity "manifestly unfair", but none of the recommendations has been accepted and no government response has been published.

### Is spouses' income counted together

No. The model assesses each applicant individually, adult dependants included. The Commons committee recommended moving to household-level assessment, noting that the current approach produces perverse outcomes, but the recommendation has not been accepted. In practice this means spouses in one family may end up on different settlement timetables.

### What should someone approaching the five-year mark in the coming months do

Check readiness to apply under the rules in force and do not delay: the reform is billed as retrospective, the implementation target is autumn 2026, and no transitional regime has been announced. Factor in separately the already enacted rise in the language requirement to B2 from 26 March 2027 — it will reach a partner and adult dependent children too.

---

## Factual claims

- As at 20 August 2026 there is no final text of the rules.
- Naturalisation is a separate procedure under the British Nationality Act 1981 with its own qualifying period.
- An important planning detail: for the five-year reduction the consultation requires £50,270 across the three years immediately preceding the settlement application.
- One part of the future architecture has already become law — and it is worth separating from the proposal.
- Since 6 April 2025 the non-dom regime and the remittance basis have been abolished.
- The fourth is to underestimate B2.

---

Source: wiki.private.law — the private.law legal knowledge base. When quoting, cite the canonical page URL.
Consultation with a lawyer: https://t.me/private_law_bot