Hiring skilled international workers can bring new expertise and opportunities to UK businesses. However, employers must consider various financial and legal responsibilities when sponsoring workers from outside the UK, including the Immigration Skills Charge (ISC).
Introduced to encourage investment in the UK’s domestic workforce and fund skills development, the ISC is an additional fee that employers may need to pay when sponsoring foreign workers on certain visa routes. This blog explains what the ISC is, who it applies to, how much it costs and how businesses can incorporate it into their hiring plans.
What Is the Immigration Skills Charge?
The ISC is a fee that UK employers pay when sponsoring skilled workers from overseas on certain work visas. It was introduced in April 2017 as part of the government’s efforts to encourage investment in the domestic workforce and to fund skills training and apprenticeships. It acts as a disincentive in the hope that employers recruit from the local labour market.
The charge applies to businesses that employ non-UK workers under specific visa categories, and it is collected by the Home Office when a Certificate of Sponsorship (CoS) is assigned.
Who Needs to Pay the Immigration Skills Charge?
Whether an employer needs to pay the ISC depends on the visa category under which they are sponsoring a worker.
Visa categories subject to the ISC
The ISC applies when sponsoring workers under the following visa routes:
- Skilled Worker visa – for individuals coming to the UK to work in an eligible skilled job.
- Senior or Specialist Worker visa (under the Global Business Mobility route) – for employees transferring to a UK branch or subsidiary of their overseas employer.
Exemptions from the ISC
Certain workers and employment scenarios are exempt from the charge. Exemptions apply to:
- Workers sponsored in specific PhD-level roles, such as researchers and scientists.
- Senior or Specialist Workers who are EU nationals, provided they meet conditions relating to job duration and previous employment in the organisation.
- If a CoS is assigned that does not extend the date of the worker’s previous permission for which the ISC was paid (if switching occupation codes with the same employer, for example).
- Individuals switching from a Student visa to a Skilled Worker visa, including their extension applications (if extending permission in the same role with the same sponsor).
- Workers applying for a visa that lasts for less than six months.
If a sponsored worker falls under one of these exemptions, the ISC does not apply, reducing the overall cost of sponsored employment.
How much is the Immigration Skills Charge?
The ISC is calculated based on the size of the sponsoring business and the length of the worker’s visa.
Fee structure
- Large and medium-sized businesses: £1,000 per year, per sponsored worker.
- Small businesses and charities: £364 per year, per sponsored worker.
Examples of ISC costs
For a large business sponsoring a worker on a three-year Skilled Worker visa, the ISC would total £3,000, while for a small business sponsoring a worker on a five-year visa, the ISC would total £1,820.
The charge must be paid upfront for the entire period covered by the Certificate of Sponsorship.
When and How to Pay the ISC
Employers pay the ISC when assigning a CoS to a worker. The charge is processed online through the same system used to assign the CoS.
Payment process
- Assign a CoS to the worker through the Sponsorship Management System.
- Pay the ISC at the same time as the CoS assignment fee which is currently £239 for a Skilled Worker or Senior or Specialist Worker visa.
Consequences of incorrect payment
If the ISC is not paid correctly, the Home Office will request payment before progressing with the worker’s visa application. This can cause delays in relation to decision-making, potentially affecting business operations and project timelines.
Financial and Practical Considerations for Employers
For employers who regularly recruit international talent, the ISC represents an additional cost that must be factored into recruitment budgets.
Budgeting for the ISC
The charge can add up quickly for businesses hiring multiple foreign workers or sponsoring individuals for longer periods. Planning ahead and incorporating ISC payments into hiring budgets can help employers prepare for the financial impact.
For small businesses and charities, the reduced rate can ease some of the financial burden, but it is still important to account for the charge when making hiring decisions.
Recent Changes and Future Considerations
Immigration policies, including fees such as the ISC, are subject to review by the government. While there have been no recent changes to the ISC, employers should keep informed about any updates to sponsorship rules and fee structures.
Government priorities regarding skills training, workforce development and immigration policy may influence future adjustments to the ISC. Checking for updates from the Home Office or seeking professional guidance can help businesses stay informed.
When to Seek Legal Advice
Some employers choose to work with business immigration solicitors to manage their sponsorship responsibilities. Legal support can be useful for businesses hiring multiple foreign workers or those unfamiliar with sponsorship procedures.
A solicitor can provide guidance on:
- Sponsorship requirements and ISC obligations.
- Visa applications and compliance with complex Immigration Rules.
- Strategies for managing recruitment costs, including the ISC.
- Sponsorship compliance, ensuring that your organisation can retain its sponsor licence.
Errors in sponsorship applications can lead to delays, so seeking professional advice can help employers meet their responsibilities with confidence.
Frequently Asked Questions
Can employers get an ISC refund if a worker leaves early?
Yes. If a sponsored worker leaves their job before their visa expires, the employer can request a refund for the unused portion of the ISC.
Does the ISC apply to visa extensions?
Yes. If a worker extends their visa, an additional ISC payment is required for the new period of sponsorship. Some exemptions may still apply if the worker qualified for one initially.
Can employers pass ISC costs onto workers?
No. The ISC must be paid by the sponsoring employer and cannot be recovered from the worker.
The Immigration Skills Charge is an important consideration for UK employers hiring workers from overseas. Staying informed about sponsorship obligations and seeking guidance where necessary can help employers manage international recruitment with confidence.