Navigating the UK’s immigration system can be complex, especially for employers who need to recruit talent from overseas. One aspect that often catches businesses off guard is the Immigration Skills Charge (ISC).
Introduced by the UK government in April 2017, the ISC is a levy imposed on employers who sponsor international skilled workers. The charge was introduced to encourage UK businesses to invest in training and upskilling the domestic workforce rather than relying on migrant workers. In this guide, we’ll explain the details UK employers need to know about the ISC.
When will I need to pay the charge?
The charge is payable by UK employers who sponsor foreign workers under the Skilled Worker or Global Business Mobility – Senior or Specialist Worker (formerly known as the Intra-Company Transfer visa) visa routes.
You will need to pay the Immigration Skills Charge (ISC) if:
- You are sponsoring a Skilled Worker or Senior or Specialist Worker: the charge applies to all employers who sponsor foreign nationals under the Skilled Worker or Global Business Mobility – Senior or Specialist Worker visa routes.
- The worker is applying from outside the UK: if the Skilled Worker or Senior or Specialist Worker is being sponsored for 6 months or more, the ISC will be payable.
- The worker is applying from within the UK: the ISC applies to all Skilled Workers and Senior or Specialist Workers applying for permission to remain from within the UK. It does not matter how long they are being sponsored for. The ISC will also apply to those extending their permission to remain, and can sometimes be payable for an extension application even though the worker was previously exempt (if they change sponsors, for example).
There are certain exceptions where the ISC does not apply:
- If sponsoring a worker to undertake a specified occupation: if you are sponsoring a worker in a specified PhD-level role, such as chemical scientists or higher education teaching professionals, you are exempt from paying the ISC. Clergy, sports players and sports coaches, instructors and officials are also exempt from the ISC.
- International students switching to a Skilled Worker visa: if you are hiring an international student who has graduated from a UK institution and is switching to a Skilled Worker visa from a Student visa, you are not required to pay the ISC.
- EU nationals applying under the Global Business Mobility: Senior or Specialist Worker route: will be exempt if the EU national is currently working at one of the sponsor’s offices in the EU, and will be sponsored by the UK-linked entity for up to three years.
- Further CoS is assigned by the same employer: the Immigration Skills Charge (ISC)will not be payable if the further CoS does extend beyond the date the previous CoS assigned.
- Other exemptions: workers being sponsored for less than six months will be exempt, as will those granted Tier 2 permission using a CoS assigned prior to 6 April 2017 and who have continued to hold permission to remain as a Skilled Worker/Tier 2 migrant ever since.
It’s important to note that failing to pay the ISC when required can lead to delays with the processing of visa applications, and potentially the refusal of visa application in the event of non-payment. Solicitors who specialise in business immigration services can help you to work out whether or not you need to pay the charge.
How much is the Immigration Skills Charge?
The cost of the Immigration Skills Charge (ISC) varies depending on two factors: the size of the sponsoring organisation and the length of employment specified on the Certificate of Sponsorship (CoS). This charge is applied per sponsored worker, calculated on an annual basis, and must be paid upfront when the CoS is assigned. The ISC fees for organisations based on their size are:
- Medium or Large Sponsors: For medium or large sponsors, the ISC is set at £1,000 per year for each migrant worker sponsored. This means that if an organisation sponsors a worker for a five-year period, the total charge would amount to £5,000. Large sponsors are typically defined as organisations with an annual turnover exceeding £10.2 million, with total assets worth £5.1 million or more, and those who employ more than 50 employees. These criteria ensure that larger businesses, which generally have more substantial resources, contribute more towards the ISC, reflecting their greater capacity to absorb such costs.
- Small or Charitable Sponsors: For small or charitable sponsors, the ISC is significantly reduced to £364 per year. Small sponsors include organisations who can comply with at least two of the following: annual turnover of £10.2 million or less, total asserts worth £5.1 million or less, and fewer than 50 employees. Charitable sponsors include registered, excepted or exempt charities, or ecclesiastical corporations established for charitable purposes. For example, if a small business sponsors a non-UK Skilled Worker for a three-year period, the total ISC cost would be £1,092 (calculated as £364 per year for three years).
The Certificate of Sponsorship (CoS) fee is required for each sponsored worker. As of 2024, the standard fee for issuing a CoS is £239 per worker. This fee is mandatory and non-refundable, even if the visa application is later refused or withdrawn.
Another cost is the Immigration Health Surcharge (IHS), which is charged to cover the worker’s access to the NHS during their stay. The IHS is set at £1,035 per year for most visa applicants, with the total amount required to be paid upfront for the entire duration of the visa. For instance, a five-year visa would incur an IHS cost of £5,175 per worker.
Can an employer pass the charge onto the employee?
The Immigration Skills Charge (ISC) must not be recouped from sponsored workers. Home Office guidance confirms that compliance action will likely be initiated against employers who seek to recoup the ISC from their sponsored workers, and that the Home Office will normally revoke the sponsor licence.
The UKVI application fee and IHS can potentially be recouped from sponsored workers; many sponsoring organisations initially pay these fees on behalf of their sponsored workers, but may include a clause in the employment contract seeking reimbursement should the sponsored worker resign within a specific period of time.
Is the charge refundable?
In certain circumstances, the ISC may be refunded:
- Visa refusal, application refused or CoS not used: If the worker’s visa application is refused or if they withdraw their application you may be eligible for a refund of the ISC. A refund will also be payable if the CoS was not used by a worker for the purpose of a visa application.
- Shortened employment: If the sponsored worker leaves your employment earlier than expected and you inform the Home Office, you may be eligible for a partial refund of the ISC for the remaining period of sponsorship. However, the refund will only be for full years of the unused portion of the sponsorship.
- Overpayment of ISC: sponsor’s will qualify for a partial refund of ISC if they have overpaid.
- Visa issued for shorter period: if the sponsored worker’s visa is issued for a shorter period than what you were hoping to sponsor them for, sponsors should receive a partial refund.
Refunds are usually automatic, and can take up to 90 days to be processed. There is an Immigration Skills Charge (ISC) team within the Home Office who can be contacted if sponsors have any questions or are seeking to chase a refund that still has not been paid.
