UK Government Announces Significant Increase in Immigration Fees
On Thursday 13 July 2023, the UK government made a critical announcement regarding immigration fees, signalling substantial cost increases for sponsors and migrants. While the implementation date is yet to be disclosed, it is imperative for both employers and migrants to start preparing for these changes without delay and, where possible, submit applications before the new fees take effect. Employers should also consider revisiting their budgets and HR policies for recruitment in light of these changes.
Immigration Health Surcharge (IHS) Increase
The Immigration Health Surcharge (IHS) serves to ensure that migrants contribute adequately to the cost of their NHS care and must be paid to the Home Office during the visa application process. Currently set at £624 per person per year, the IHS fees will rise by a staggering 66% to £1,035 per person per year. Additionally, the discounted rate for students and minors will increase from £470 to £776 per person per year.
Other Fee Increases
Beyond the IHS, other visa-related fees will also witness an uptick. Visit and work visa fees will surge by 15%, while student visas, certificates of sponsorship, settlement, citizenship, wider entry clearance, leave to remain, and priority visas will see an increase of at least 20%. Moreover, students and priority service users will now pay the same fees, irrespective of whether they apply from within the UK or from abroad.
The UK Government estimates that the new fees will generate revenue exceeding a billion pounds, which is intended to contribute to funding pay increases for public sector workers. However, a full impact assessment of these changes has not been published yet.
Impact for Employers
The implications of these fee hikes for employers are manifold. Besides the direct cost burden of sponsoring a worker, employers may face various challenges, such as:
- Deferral or cancellation of moves for candidates who have already been offered a role in the UK;
- Reassessing immigration policies, such as comparing the impact of the graduate visa route versus the skilled worker route for employers running graduate programs;
- Ensuring right-to-work compliance and addressing business continuity issues that may arise if employees fail to extend their immigration permission due to unaffordability;
- Decisions to leave vacancies unfilled due to the financial strain of sponsorship;
- Possible implementation or increased use of immigration fee clawback agreements;
- Potential requests for financial assistance from existing employees, who are typically responsible for paying their own immigration fees.
The combination of these fee increases and the ongoing challenges posed by Brexit has already made it exceedingly difficult for employers to recruit talent, leading to severe staff shortages and an ever-increasing burden of sponsorship fees.
Preparing for the Changes
Both migrants and employers should act promptly and prepare for these fee increases. We advise submitting applications as soon as possible, and we will continue providing updates on these developments.
If you have any questions or concerns regarding these changes, please do not hesitate to get in touch with a member of our Immigration Team.