It is a requirement for settlement (indefinite leave to remain) in certain categories that the applicant demonstrates that the Knowledge of Life in the UK (KOL) requirement is met. If all the requirements are met apart from KOL it is currently the case that applicants are automatically considered for grant of limited leave in the same category. The difference in the fee between the settlement application and the cost of an extension of stay is refunded.
From 31 March 2009 this arrangement will be coming to an end. Settlement applications submitted on or after this date in categories requiring KOL that do not meet this condition will be refused. Applicants will not have their fee refunded.
You will still be able to extend your stay if you do not meet the KOL requirement. However, from 31 March 2009 you will need to make sure that you apply specifically for limited leave on the relevant form, rather than submitting a settlement application.