What is UK Immigration Skills Charge and Do You Need to Pay?

As an employer based in the UK, recruiting skilled overseas workers requires a full understanding of the implications of becoming a Home Office sponsor licence holder. Many businesses forget to calculate the full cost burden to their business of putting in place the people, systems and processes needed to meet the duties of a licence holder and the fees payable for each person sponsored and Certificate of Sponsorship (Cos) issued. In this article, we will explain how the Immigration Skills Charge works, who pays the fee, and how much it costs.

What is the UK immigration skills charge?

The Immigration Skills Charge is a fee collected by the Home Office when a skilled foreign worker is sponsored in the UK. The Immigration Skills Charge is paid each time you assign a Certificate of Sponsorship.

The Immigration Skills Charge is collected by the Home Office and used by the UK Department of Education for domestic skills and training, with the intention of filling gaps in the local labour market supply.

The Immigration Skills Charge was originally introduced by the Immigration Skills Charge Regulations 2017 and later amended by The Immigration Skills Charge (Amendment) Regulations 2020. Prior to 1^st January 2021, UK businesses recruiting EU and EEA nationals did not need to pay the Immigration Skills Charge (due to free movement). Since the start of 2021, however, due to the ending of UK/EU free movement following Brexit, more and more businesses relying on skilled overseas staff have registered for sponsor licences, and hence are now required to pay the Immigration Skills Charge.

Which visa routes does the Immigration Skills Charge apply to?

The Immigration Skills Charge applies to the:

• Skilled Worker visa, and;
• Intra-Company Transfer (ICT) visa

The Home Office rules state that the Immigration Skills Charge is paid where an overseas worker is applying for a visa from:

• Outside the UK if they intend to work in the UK for 6 months or more
• Inside the UK for any length of time

UK Immigration Skills Charge exemptions

There are several scenarios under which an employer may not need to pay the Immigration Skills Charge, including for workers:

• On an Intra-company Graduate Trainee visa
• On a student visa in the UK who is switching to a Skilled Worker or Intra-company Transfer visa
• In a profession with one of the following standard occupation codes (SOC):
  • Chemical scientists (2111)
  • Biological scientists and biochemists (2112)
  • Physical scientists (2113)
  • Social and humanities scientists (2114)
  • Natural and social science professionals not elsewhere classified (2119)
  • Research and development managers (2150)
  • Higher education teaching professionals (2311)
  • Clergy (2444)
  • Sports players (3441)
  • Sports coaches, instructors or officials (3442)
• Assigned a cos before 6th April 2017

The charge is not payable for any dependents of the visa holder, only for the visa holder themselves. This can come as a relief for those who are looking to bring in staff who have partners and children,

If you are unsure if you need to pay the Immigration Skills Charge and the rate you should be paying, it is advisable to check with an immigration Solicitor.

How much is the Immigration Skills Charge?

The charge is based on the size of your business and the duration of the visa, as follows:

For instance, a small business or charity will pay £364 for the first 12 months (plus £182 per 6 months thereafter), and a medium or large company will pay £1,000 for the first 12 months (plus £500 for every 6 months thereafter).

If your worker will be in the UK for longer than 6 months but less than a year, you must pay for at least 12 months.

As the longest you can sponsor a worker for is 5 years, the most you have to pay will be:

• £1,820 (5 x £364) if you are a small or charitable sponsor
• £5,000 (5 x £1,000) if you are a medium or large sponsor

Is my business classed as a small or charitable sponsor?

A small sponsor is a business with:

• An annual turnover is £10.2 million or less
• Total assets are worth £5.1 million or less
• 50 employees or fewer

Your business will be classed as a charity if it is:

• A registered charity in England or Wales
• A registered charity in Scotland
• A registered charity in Northern Ireland - if you’re not on the register, you must provide proof of your charitable status for tax purposes from HM Revenue and Customs (HMRC)
• An excepted charity
• An exempt charity
• An ecclesiastical corporation established for charitable purposes

Who needs to pay the immigration skills charge?

The Immigration Skills Charge is paid by the employer when a new Certificate of Sponsorship is issued using the Home Office’s Sponsorship Management System (SMS) portal. As such, this is not a fee that can be passed on to the employee.

It is important to note that the Immigration Skills Charge is only one of a number of costs your business should budget for if you are recruiting overseas staff; other sponsorship costs include:

• The cost of issuing a new Certificate of Sponsorship
• Any costs associated with ongoing compliance checks (many businesses use external professionals to carry out mock audits to ensure they are compliant)
• Sponsor licence fees and renewals
• Costs associated with putting in place systems and processes to manage your sponsor licence
• Employing someone to manage the Home Office’s Sponsorship Management System (SMS) and the sponsorship process (even if this is a part-time role)

Is the Immigration Skills Charge payable again if a sponsored worker changes jobs with the same employer?

This is a question we are commonly asked as it may appear that every time a new CoS is issued, the Immigration Skills Charge is payable, but this is not always the case. If the person you are sponsoring changes to a new role in your company with a different occupation code (from the one they were originally recruited on), they will need a new CoS, which will allow them to apply for a new work visa. If the expiry date on the new visa is the same as the expiry date on the old visa, you will have effectively already covered the charge for the period, hence no more Immigration Skills Charge is payable. If, on the other hand, the expiry date is later than the old visa, you will need to pay the Immigration Skills Charge again.

UK Immigration Skills Charge refunds

A refund of the Immigration Skills Charge may be issued by the Home Office (partial or in full) in certain circumstances. A full refund will be issued to the sponsoring employee if the candidate’s work visa application is refused or withdrawn, or it is granted, but they end up not coming to work for the employer.

A partial refund part of the Immigration Skills Charge may be granted where the sponsored worker:

• Gets less time on their visa than you sponsored them for
• Starts working for you but then changes to another sponsor
• Leaves their job before the end date on their certificate of sponsorship

The Home Office guidance also states that if you end up paying the larger Immigration Skills Charge for a medium or large sponsor, but you have already informed UKVI that you are now a small or charitable organisation, they will refund the difference. Refunds are typically issued within 90 days of being requested, the visa is rejected, or the application is withdrawn.

How can Reiss Edwards help?

Reiss Edwards provide global mobility expertise to many of the world’s largest multinational organisations and many small, medium, and large employers in the UK, ensuring they always have the necessary skilled international staff where and when needed. We can assist with all aspects of your international employee sponsorship, including:

• Advising on global mobility strategy
• Handling all aspects of visa applications
• Handling sponsor licence applications
• Advising on sponsorship systems, processes, and procedures
• Carrying out mock audits and providing advice to ensure your ongoing Home Office sponsor compliance
• Overcoming application refusals
• Dealing with the downgrading or revocation of sponsor licences