The immigration skills charge is an additional fee payable by a sponsoring employer when a certificate of sponsorship is issued prior to a worker beginning their employment. The sponsor is required to pay the immigration skills charge and cannot pass liability onto the sponsored worker. Doing so could risk revocation of a sponsorship licence.
Launched in April 2017 with the attempt to incentivise UK based employers to train up domestic workers and reduce reliance on overseas workers, the immigration skills charge acts as an additional upfront overhead for businesses recruiting overseas talent.
The fee applies only to skilled workers and senior or specialist workers under the Global Business Mobility route who were issued with a certificate of sponsorship after 6 April 2017. We will explain who is required to pay, when, and the exemptions that exist depending on the nature of the worker and the employment.
How much is a sponsor required to pay?
The amount payable is dependent on the size and nature of the organisation. It also depends on the length of a potential worker’s employment as specified on the certificate of sponsorship.
Importantly, sponsors are not required to pay a fee for any worker applying for permission to stay for less than 6 months. If an application is submitted for longer than 6 months but less than 12 months, the sponsor is liable for the full yearly charge.
For small or charitable sponsors which meet the definition of regulation 2 of the Immigration Skills Charge Regulations, the immigration skills charge exists as another upfront cost payable when recruiting overseas staff.
Small or charitable sponsors will be expected to pay £364 for a period of employment of up to 12 months. An additional charge of £182 is incurred for each subsequent period of 6 months as specified on the certificate of sponsorship.
Large sponsors are required to pay £1,000 for a period of employment up to 12 months. Each further 6-month period is charged at £500.
If the additional period of employment is for less than 6 months, the sponsor is still required to pay the full 6-month fee because it cannot be divided monthly. As an example, if a qualifying worker is allocated a certificate of sponsorship for 20 months, a small or charitable sponsor will be required to pay £728. A large sponsor will be required to pay £2,000.
What exemptions exist for sponsors?
A sponsor is exempt from paying the immigration skills charge in circumstances listed under regulation 4 of the Immigration Skills Charge Regulations 2017. Exemptions apply where:
- A worker is applying under certain PhD occupation codes. These include certain scientists, research and development managers, higher education teaching professionals, clergy, sports players and specific coaches or instructors.
- A worker is switching from the student route. This includes where a worker initially switched from the student route and is now extending in the same role with the same sponsor.
- A worker was granted a certificate of sponsorship prior to 06 April 2017, continues to hold permission as a skilled worker and continues to work in a skilled role.
- A worker is an EU national or holds a Latvian non-citizen passport and is assigned a certificate of sponsorship as a senior or specialist worker under the Global Business Mobility Route. A sponsor is exempt where a certificate of sponsorship was issued on or after 01 January 2023 for no more than 3 years, and the worker is currently employed at the sponsor’s offices or a linked business in the EU.
- A worker is continuing employment with their current sponsor but requires a new certificate of sponsorship, provided their length of stay remains the same.
- A worker is seeking entry clearance to the UK for no more than 6 months.
Sponsors should be aware that the immigration skills charge is not payable for dependants of applicants.
What happens if a sponsor does not pay the immigration skills charge?
If the immigration skills charge is not paid in full, a certificate of sponsorship will remain invalid until payment is received. A sponsor will receive a formal reminder to make payment. If the fee remains unpaid within 10 working days (3 working days in priority applications) of this reminder, the application for entry clearance or permission to remain will be refused.
What circumstances will lead to a refund or top up request?
A sponsor will be entitled to a full refund where an application is refused by the Home Office or withdrawn by the applicant. Similarly, a full refund will be issued but the worker does not commence employment with the sponsor and the certificate of sponsorship expires. A partial refund is provided where the worker is granted permission for a period less than requested on the certificate of sponsorship.
A sponsor is entitled to a partial refund in situations where the employment ends. For instance, if a worker voluntarily changes sponsors or stops working early due to ill health, then the sponsor can request a refund.
A top up request for payment of additional fees will be sent to a sponsor by email in situations where a sponsor has underpaid the fee payable, or where the sponsor has erroneously been registered as a small or charitable organisation. The sponsor will be sent a link to make payment through the WorldPay portal.
How is the immigration skills charge being used?
In November 2022, the immigration skills charge had generated around £349 million in the 2021-22 fiscal year, reflected in the Home Office annual report and accounts. This presents as a significant jump from around £139 million the preceding year.
Whilst the purpose of the charge exists to incentivise employers to recruit and train domestic workers and decrease reliance on overseas workers, there has been a marked lack of clarity on exactly where this tax is being invested. A portion of the charge is allocated between the devolved regions for education and skills purposes, although how this is being used to address the skills gap in the UK, or whether the intended reason for introduction is being met remains to be seen.
The immigration skills charge has faced considerable criticism as neither necessary nor functional from public sector bodies who are desperately understaffed. The recent addition of care workers and labourers to the shortage occupation list highlights the importance of attracting overseas talent in a post-Brexit Britain and the original purpose for introducing the charge seems increasingly redundant.
On top of increasing visa fees and immigration health surcharge, it is questionable whether businesses, including small or charitable organisations, should be financially penalised for recruiting workers where the domestic labour market is simply unable to fill the positions needed.