If your UK business is sponsoring skilled foreign workers, it’s important to understand the Immigration Skills Charge (ISC) and how it affects your costs and responsibilities. The ISC is a fee that businesses must pay when sponsoring workers for a Skilled Worker visa or Senior/Specialist Worker visa.
The number of businesses paying this charge has increased significantly, especially since it became a requirement for all UK employers to have a sponsor license to employ foreign workers. However, many employers are still unsure about what the ISC is, how much it costs, and when it needs to be paid.
What Is the Immigration Skills Charge?
The Immigration Skills Charge is a fee paid by employers when they sponsor a foreign worker to come to the UK under the Skilled Worker or Senior/Specialist Worker visa routes. The charge helps to fund domestic skills development in the UK and encourages companies to invest in training and developing local workers.
The ISC applies when a worker is:
- Applying for a visa to come to the UK for six months or longer.
- Already in the UK and applying for an extension of their visa.
The charge was introduced on April 6, 2017, and revised in 2020. Before January 2021, EU and EEA workers were exempt from the charge, but since Brexit, businesses hiring skilled workers from the EU must now pay the ISC.
Who Must Pay the Immigration Skills Charge?
The business sponsoring the worker must pay the ISC, and it cannot be passed on to the employee. Passing the charge to the employee could result in the loss of your sponsor license.
The amount of the charge depends on:
- The size of your business (small, medium, or large).
- The duration of the worker’s employment.
There are two rates for the ISC:
- Large charge: For medium and large businesses, £1,000 for the first 12 months, and £500 for each additional 6 months.
- Small charge: For small businesses and charities, £364 for the first 12 months, and £182 for each additional 6 months.
For example, if you’re a small business sponsoring a worker for 2 years, you would pay £910 (£364 for the first year and £182 for the second).
You can use the Immigration Skills Charge Calculator to work out the total fee based on the length of your employee’s contract.
How to Pay the Immigration Skills Charge
You must pay the ISC when you assign a Certificate of Sponsorship (CoS) to the worker. The Home Office will calculate the fee based on the dates you provide in the sponsorship application.
How to Determine Your Business Size
To know if your business qualifies as “small” or “large,” check if at least two of the following apply:
- Small business:
- Annual revenue is £10.2 million or less.
- Assets are £5.1 million or less.
- The workforce has 50 or fewer employees.
- Charitable sponsors: If you are a registered charity in the UK, you are considered a small sponsor and pay the reduced charge.
If your business doesn’t qualify as small or charitable, you will be classified as a medium or large sponsor and must pay a higher fee.
What Happens If You Pay the Wrong Amount?
If you pay the wrong ISC amount, the Home Office will notify you. You will have 10 working days to pay the difference. Failure to do so may result in the rejection of the visa application.
What Happens If You Don’t Pay the ISC?
If you fail to pay the ISC, the worker’s visa application will be delayed or rejected. If the payment is missing, the Certificate of Sponsorship will be invalid. The Home Office will send a reminder for payment, but if the full amount is not paid within 10 working days, the application will be refused.
Are There Any Exceptions to the ISC?
There are a few exceptions where you do not need to pay the ISC:
- Workers applying for visas are less than 6 months long.
- Workers with a Certificate of Sponsorship assigned before April 6, 2017.
- Certain job roles, such as physical scientists, social scientists, and some teaching professionals, are exempt from the ISC.
- Workers who are dependents (partners or children) of the sponsored employee do not need to pay the fee.
Refunds for the Immigration Skills Charge
In some cases, employers can get a refund of the ISC:
- Full refund: If the worker’s visa is refused or withdrawn, or if they don’t work for you after the visa is granted.
- Partial refund: If the worker’s visa is for a shorter period than expected, or if they leave your employment early.
Refunds are typically processed within 90 days of the relevant event.
Why Is the Immigration Skills Charge Important?
The ISC is part of the UK’s immigration strategy to encourage businesses to invest in the skills of the domestic workforce. It also helps fund training programs and skills development to close the skills gap in the UK labor market.
Failure to pay the ISC can lead to serious consequences, such as the revocation of your sponsor license, which could limit your ability to hire skilled foreign workers.
Sponsoring skilled workers from overseas can be a great way to fill talent gaps in your business. However, it’s important to be aware of all the costs involved, including the Immigration Skills Charge. Make sure you understand when and how to pay the fee, and what exemptions or refunds might apply.
If you have any questions or need help with calculating or paying the ISC, Law and Visas can assist you. Our experienced team can guide you through the process and ensure your business remains compliant with UK immigration rules. Get in touch with us for expert advice on managing your sponsor license and related charges.
