Immigration Skills Charge: 2024 Guide

What is the Immigration Skills Charge?

The Immigration Skills Charge (ISC) is a fee that UK employers must pay when hiring non-UK nationals for work visas, in accordance with the Immigration Skills Charge Regulations. The ISC was established in April 2017 to reduce dependency on migrant labor by encouraging investment in the domestic workforce and addressing the UK’s skills gap.

The funds collected through the ISC are allocated to the Department of Education to support investment in domestic skills training and development. This helps employers by promoting a stronger local talent pool and reducing long-term reliance on overseas hires.

Initially, only non-EU nationals were subject to this charge, but post-Brexit, it now includes EU and EEA citizens as well. Since January 1, 2021, all UK employers who wish to hire migrant workers must hold a valid sponsorship license. Therefore, the number of businesses affected by the ISC has significantly increased.

The Immigration Skills Charge (ISC) varies according to employer size and the duration of a worker's sponsorship. For businesses dependent on skilled migrant workers—especially those scaling up and frequently hiring internationally—the ISC can accumulate into a significant cost over time.

Strategic workforce planning is essential to manage these expenses effectively by factoring the ISC alongside other employment costs. While it represents an additional financial burden, the ISC is a vital investment that allows businesses to access the necessary skills and expertise for growth and innovation. Employers must carefully consider the ISC when recruiting in sectors lacking skilled local workers.

Who is Required to Pay the Immigration Skills Charge?

UK employers who hold a sponsorship license must pay the Immigration Skills Charge when assigning a Certificate of Sponsorship (CoS) through the Sponsor Management System (SMS) account. The charge is strictly the sponsoring employer's responsibility and cannot be passed on to the migrant worker.

This fee applies to employers sponsoring skilled workers or senior or specialist workers under the Global Business Mobility route, provided the certificate of sponsorship was issued after 6 April 2017. Certain exemptions depend on the nature of the worker’s role and employment, which we’ll cover in detail.

How Much Does the Immigration Skills Charge Cost?

The Immigration Skills Charge rates vary based on the size and type of business, as well as the duration of the worker's sponsorship period. Below, we break down how the ISC applies to large businesses, small businesses, and charities.

ISC Rates for Large and Small/Charitable Sponsors

Large Sponsors
For medium and large businesses, the ISC is set at £1,000 per sponsored worker for the first 12 months, with an additional £500 charge for each subsequent 6-month period. The maximum fee is capped at £5,000 for five years per worker.

Small or Charitable Sponsors

Small businesses and registered charities pay a reduced ISC rate of £364 for the first 12 months and £182 for each additional 6-month period. For a five-year period, the maximum total ISC for small or charitable sponsors is £1,820.

Eligibility Criteria for Small or Charitable Sponsors

To qualify for the reduced ISC rate, sponsors must meet at least two of the following criteria:

• Annual turnover of £10.2 million or less
• Total assets not exceeding £5.1 million
• Fewer than 50 employees

Registered charities also qualify for the lower ISC rate. Businesses that do not meet these criteria must pay the large sponsor rate.

Payment Requirements and Non-Apportionment Rule

The ISC fee is payable in full when the Certificate of Sponsorship (CoS) is assigned to the worker and must cover the entire sponsorship period as specified on the CoS.

ISC payments cannot be prorated for partial periods: for instance, if a worker’s sponsorship is for 15 months, the employer must pay for 18 months.

When to Pay

Employers must pay the Immigration Skills Charge (ISC) upfront when assigning a Certificate of Sponsorship (CoS). The payment is made during the CoS application process through the Sponsorship Management System and is part of the overall fees associated with the certificate. This ensures that all financial obligations are met before the application proceeds and the Home Office processes the migrant worker's visa application.

Employers cannot issue a Certificate of Sponsorship (CoS) without paying the Immigration Skills Charge (ISC). However, an organisation can pay the wrong amount if the sponsor's size is incorrectly recorded in the Sponsorship Management System. In such situations, the Home Office will request a top-up payment to cover the difference.

If the top-up payment is not made within 10 days of being requested, the worker's permission to stay or entry clearance can be refused. This underscores the importance of accurately reporting your organisation's size and status to avoid delays or refusals in the visa application process.

The ISC is required each time an employer assigns a CoS for a Skilled Worker visa or Senior or Specialist Worker visa, including when extending a worker's visa with a new certificate. However, if the new certificate does not extend the worker's visa duration, no additional ISC payment is required.

It is important to note that employers must not pass the cost of the ISC onto the sponsored worker. Doing so violates immigration regulations and could result in the revocation of the employer's sponsorship license.

Refunds and Partial Refunds

Under certain circumstances, employers may be eligible for a full or partial refund of the Immigration Skills Charge (ISC).

Refunds and Partial Refunds

Under certain circumstances, employers may be eligible for a full or partial refund of the Immigration Skills Charge (ISC).

Full Refunds

You will receive a full refund of the ISC if the worker's visa application is:

• Refused or withdrawn.
• Successful, but the worker does not come to work for you.

Partial Refunds

You will receive a partial refund of the ISC if:

• The worker gets less time on their visa than you sponsored them for.
• The worker starts working for you but then changes to another sponsor.
• The worker leaves their job before the end date on their Certificate of Sponsorship.
• You paid the medium or large sponsor fee when assigning the certificate but had already notified UK Visas and Immigration (UKVI) that you are now a small or charitable sponsor.

A partial refund is also available if the charge was overpaid based on your sponsor size or status.

Processing of Refunds

Refunds are typically processed within 90 days of notifying UKVI about the worker's change in status. If an administrative review is unsuccessful, a refund will still be issued within 90 days after the decision. If you do not receive the refund within the designated time frame, it is advisable to contact UKVI.

Who is Exempt from paying?

The ISC applies to most sponsored worker visas. However, there are specific exemptions when hiring for certain critical roles. These exemptions enable the UK to remain competitive in attracting top talent in research, education, and sports, which might otherwise be difficult to hire.

Exemptions Based on Occupation Codes

These roles align with the UK’s strategic priorities for advancing education, science, and sports.

Additional Exemptions to the ISC

1. Students Switching to Skilled Worker Visa
   International students who have completed their studies in the UK and switched from a Student visa to a Skilled Worker visa are exempt from paying the ISC. This exemption encourages UK-educated talent to remain and contribute to the UK economy.
2. Short-Term Assignments (Less than 6 Months)
   Workers requiring entry clearance to the UK for a period of less than six months are not subject to the ISC. This exemption applies to both initial and temporary assignments.
3. Certificates of Sponsorship Issued Before 6 April 2017
   Workers initially sponsored on or before April 6, 2017, under the Tier 2 (General) or Tier 2 (ICT) route and who maintain continuous Skilled Worker permissions are exempt from the ISC.
4. Global Business Mobility Senior or Specialist Worker Route
   For certain EU nationals, employers on the GBM Senior or Specialist Worker route are exempt from the ISC. This applies to EU nationals transferring from an EU-based linked business to the UK for up to 36 months, provided the overseas company is part of the same sponsor group and is based within the EU.
5. Dependants of Sponsored Workers
   Employers are not required to pay the ISC for dependants, including spouses and children, of sponsored workers.
6. Scale Up Visa
   The Scale-up visa route is classified as a 'Temporary Worker' route for sponsor licensing, so employers pay the standard Temporary Worker fee when obtaining a sponsor licence or assigning a Certificate of Sponsorship. Importantly, there is no Immigration Skills Charge, making it cost-effective for businesses hiring eligible highly skilled workers. However, an additional fee applies if you use the 'endorsing body pathway'.

Additional Costs Involved in Sponsoring a Worker

Sponsoring a worker involves several additional costs beyond the Immigration Skills Charge. These include:

• Visa application fees
• Relocation costs
• Legal costs
• Immigration Health Surcharge.

Employers must also consider the costs of maintaining a sponsor license and administrative expenses in the sponsorship process. These costs are subject to change, so employers should stay updated on the latest fee structures to budget accordingly.

Get Support With Sponsor Licence & ISC

The ISC is a critical component of the UK's immigration system, balancing the recruitment of global talent with the development of the local workforce. As an employer, it's your responsibility to manage these costs and comply with all regulations involved in hiring foreign workers.

At QC Immigration, we have years of experience helping clients obtain their sponsor licences, issue Certificates of Sponsorship, and assist employees with their Skilled Worker visa applications. We also provide ongoing support to ensure you comply with all sponsor licence responsibilities, including effectively managing the Sponsorship Management System (SMS) for your foreign workers.

If you have any questions and want help, please contact QC Immigration to see how we can support your visa and immigration needs.