diff --git a/meta/classes-recipe/license_image.bbclass b/meta/classes-recipe/license_image.bbclass
index 7d00b1ae53..728db8ae3a 100644
--- a/meta/classes-recipe/license_image.bbclass
+++ b/meta/classes-recipe/license_image.bbclass
@@ -128,16 +128,23 @@ def write_license_files(d, license_manifest, pkg_dic, rootfs):
 
             pkg_allow_licenses = oe.license.filter_pkg_license_list(pkg, allow_licenses)
 
+            # Host tools in the SDK (nativesdk, cross-canadian) are not
+            # subject to INCOMPATIBLE_LICENSE, same as at parse time.
+            if oe.license.incompatible_license_check_needed(d, pkg_dic[pkg]["PN"]):
+                pkg_bad_licenses = bad_licenses
+            else:
+                pkg_bad_licenses = []
+
             if node:
-                if incompatible_licenses := oe.license.license_allowed(node, bad_licenses, pkg_allow_licenses):
+                if incompatible_licenses := oe.license.license_allowed(node, pkg_bad_licenses, pkg_allow_licenses):
                     incompatible_packages.append("%s (%s)" % (pkg, ' '.join(n.to_string() for n in incompatible_licenses)))
-                elif incompatible_licenses := oe.license.license_allowed(node, bad_licenses, []):
+                elif incompatible_licenses := oe.license.license_allowed(node, pkg_bad_licenses, []):
                     oe.qa.handle_error('license-exception', "Including %s with incompatible license(s) %s into the image, because it has been allowed by exception list." %
                                        (pkg, ' '.join(n.to_string() for n in incompatible_licenses)), d)
 
             (pkg_dic[pkg]["LICENSE"], pkg_dic[pkg]["LICENSES"]) = \
                 oe.license.manifest_licenses(d, pkg_dic[pkg]["LICENSE"],
-                                             bad_licenses, pkg_allow_licenses)
+                                             pkg_bad_licenses, pkg_allow_licenses)
 
             if not "IMAGE_MANIFEST" in pkg_dic[pkg]:
                 # Rootfs manifest
diff --git a/meta/lib/oe/license.py b/meta/lib/oe/license.py
index e2a2bcc47d..035311d469 100644
--- a/meta/lib/oe/license.py
+++ b/meta/lib/oe/license.py
@@ -561,23 +561,28 @@ def filter_pkg_license_list(pkg, lst):
 
     return pkg_lst
 
+def incompatible_license_check_needed(d, pn):
+    """
+    Return False for recipes that INCOMPATIBLE_LICENSE does not apply to:
+    native, nativesdk, cross and cross-canadian recipes, and gcc-source.
+    """
+    if pn.startswith("nativesdk-") or pn.startswith("gcc-source-"):
+        return False
+    for t in ["-native", "-cross-${TARGET_ARCH}", "-cross-initial-${TARGET_ARCH}",
+            "-crosssdk-${SDK_SYS}", "-crosssdk-initial-${SDK_SYS}",
+            "-cross-canadian-${TRANSLATED_TARGET_ARCH}"]:
+        if pn.endswith(d.expand(t)):
+            return False
+    return True
+
 def skip_incompatible_package_licenses(d, pkgs):
     if not pkgs:
         return {}
 
     pn = d.getVar("PN")
 
-    check_license = False if pn.startswith("nativesdk-") else True
-    for t in ["-native", "-cross-${TARGET_ARCH}", "-cross-initial-${TARGET_ARCH}",
-            "-crosssdk-${SDK_SYS}", "-crosssdk-initial-${SDK_SYS}",
-            "-cross-canadian-${TRANSLATED_TARGET_ARCH}"]:
-        if pn.endswith(d.expand(t)):
-            check_license = False
-    if pn.startswith("gcc-source-"):
-        check_license = False
-
     bad_licenses = (d.getVar('INCOMPATIBLE_LICENSE') or "").split()
-    if not check_license or not bad_licenses:
+    if not incompatible_license_check_needed(d, pn) or not bad_licenses:
         return {}
 
     bad_licenses = expand_wildcard_licenses(d, bad_licenses)