Higher UK Immigration Fees Could Raise Employer Costs, Challenges

Marked increases in U.K. immigration fees that went into effect in October 2023, along with a major boost in 2024 to the Immigration Health Surcharge (IHS), could mean higher costs and more hiring difficulties for employers in the country.

Among other changes in immigration fees, the government raised most work and visit visas by 15 percent effective Oct. 4, 2023. While employers won’t pay more in sponsor fees, the U.K. increased certificates to sponsor new workers by 20 percent.

“The latest increase in immigration fees can be seen as yet another upfront overhead for businesses recruiting overseas talent,” said Vanessa Ganguin, an attorney with GQ Littler in London.

“With the skills shortages many sectors we work with are facing, these price increases are unlikely to stop a predicted increase in work visas over the next few years,” she said.

In addition to the recent fee increases, the IHS—the compulsory charge for immigrants to use the U.K.’s National Health Service—is rising about 66 percent, to 1,035 pounds from 624 pounds, in 2024. A discounted rate for students, children and youth mobility visa holders also will rise, Ganguin noted.

With the higher health surcharge, a family of two adults and two children will pay 18,110 pounds over a five-year visa, a big hike over the current 10,940 pounds, she said, adding that the charge already has tripled since it was introduced at 200 pounds in 2015.

Fee Hike Exceeds Inflation

“Home Office fees generally increase annually, but this year’s overhaul is well above inflation,” Ganguin said. “Britain’s immigration fees are already far, far higher than comparable European countries and the United States.”

While the new visa application fees are detrimental to many clients, they are far from the main impact on costs associated with U.K. work visas, said Adam Sinfield, a lawyer with Osborne Clarke in Bristol, England.

Other expenses associated with visa applications include the sponsorship certificate and immigration skills charge.

A roughly 100 pound-per-person increase in visa application fees and 40-pound hike in sponsorship certificates are unwelcome, but the over 400-pound IHS increase-per-person each sponsorship year “will impact businesses and applicants the most,” Sinfield said.

Budget Concerns

The IHS surcharge increase will add 4,932 pounds to application costs for a family of four applying for a three-year visa, Sinfield said, noting that applying for priority processing would add even more expense.

“Clients have raised significant concerns regarding the increases for reasons far beyond the cost implications and cash flow,” he said. “With the U.K.’s well-publicized skills shortage in certain sectors, many businesses turn to overseas workers to help fill the gaps. International businesses often use skills transfers to upskill their local workforce, only leading to the growth of the U.K. business, but are now concerned about [the] viability of this process.”

Businesses need to be aware of the true scale of the fee increases and ensure they have budgeted accordingly, which leads to other considerations.

Given that many costs are nonrefundable should an employee leave the company, businesses should weigh which expenses associated with an immigration application they will absorb and which they’ll pass to the employee, Sinfield said.

While the business must pay the Certificate of Sponsorship and the Immigration Skills Charge, the employee may pay all the other costs. “But is this feasible and reasonable? This will vary from business to business and sector to sector, spending on many factors, such as the strength of the labor market and skills shortages, finances [and] employee relations,” he said.

The business also should consider whether it has “strong and enforceable clawback provisions in place to recoup costs should a sponsored worker leave the business,” Sinfield added.

He suggested employers also carefully consider whether alternative visa routes are now more attractive, such as Scale-up Worker visas. Scale-up visas allow people to go to the U.K. to work for an eligible fast-growing business.

Discrimination Issues

Employers further should consider where to draw the line in deciding whether to offer sponsorship, Sinfield said.

Many businesses that have been open to sponsoring individuals are now reconsidering when they will offer sponsorship, but are worried about breaking anti-discrimination law, Sinfield said.

The last point is particularly relevant given the government’s push toward employers being able to sponsor lower-skilled occupations, often contrary to the public announcements regarding the reduction in migration, he added. Employers are faced with sponsoring lower-skilled and often lower-paid jobs at a much higher cost.

“Given the risk of acting in a discriminatory fashion, can we objectively justify refusing sponsorship on the grounds of cost?” he asked. “Advice should be sought before rejecting an application based on the visa costs.”

Dinah Wisenberg Brin is a reporter and writer based in Philadelphia.