Everything you need to know about the Immigration Skills Charge

The Immigration Skills Charge (ISC) is a vital component of the UK’s immigration system, aimed at encouraging businesses to invest in developing the domestic workforce. While essential for many employers sponsoring overseas workers, the ISC can be costly and complex if not managed effectively. This guide explores everything you need to know about the ISC, including its purpose, costs, exemptions, and refund processes, ensuring you remain compliant and informed.

What Is the Immigration Skills Charge?

The ISC is a fee UK employers must pay when sponsoring workers under the Skilled Worker visa or Global Business Mobility (GBM) routes. Introduced in April 2017, the ISC serves two key purposes:

• Reduce reliance on migrant labour by encouraging businesses to train and hire domestic workers.
• Fund skills development, with revenues directed to the Department for Education.

Employers must pay the ISC when assigning a Certificate of Sponsorship (CoS) through the Sponsor Management System (SMS). The charge must be paid upfront and cannot be passed on to the worker. Breaching this rule—such as by passing the fee to employees—can lead to sponsor licence revocation.

When Does the Immigration Skills Charge Apply?

The ISC applies to employers sponsoring workers in the following categories:

• Skilled Worker visa: For recruiting skilled overseas workers in eligible roles.
• GBM Senior or Specialist Worker visa: For international companies transferring employees to UK-based operations.

Key Points to Remember:

• The ISC applies to all CoS assigned on or after 6 April 2017.
• It must be paid for visa durations exceeding six months, even for workers applying from within the UK for shorter periods.
• Extensions to existing CoS also attract ISC charges for the additional period.
• Dependants of sponsored workers are exempt from the ISC.

How Much Does the Immigration Skills Charge Cost?

The ISC cost depends on the organisation’s size and the length of the worker’s visa:

For Large Sponsors:

• £1,000 per year for each sponsored worker.
• £500 for each additional six months.

For Small or Charitable Sponsors:

• £364 per year for each sponsored worker.
• £182 for each additional six months.

Example Costs:

• Sponsoring a worker for three years costs £3,000 for large sponsors or £1,092 for small sponsors.
• Sponsoring a worker on a 42-month visa costs £3,500 for large sponsors or £1,274 for small sponsors.

To estimate total costs, use the visa fees calculator.

Exemptions From the Immigration Skills Charge

Certain roles and circumstances are exempt from the ISC, reducing the financial burden for employers:

• PhD-Level Occupations: Includes scientists, researchers, and higher education teaching professionals in eligible SOC codes.
• Switching From a Student Visa: Graduates transitioning from a Student visa to a Skilled Worker visa.
• Short-Term Assignments: Workers assigned a CoS for six months or less.
• Existing Employment Extensions: Workers continuing in the same role with the same employer.
• Specific Roles: Clergy, sports players, and sports coaches.
• EU Nationals on the GBM Route: Workers transferring for up to 36 months under the GBM Senior or Specialist Worker visa, provided the CoS was issued on or after 1 January 2023.

What Happens if You Don’t Pay the ISC?

Failure to pay the ISC can have significant consequences:

• Invalid Certificate of Sponsorship: Without payment, the CoS cannot be used for visa applications.
• Visa Delays or Refusals: Applications will not be processed without a valid CoS.
• Compliance Risks: Non-payment may result in sponsor licence revocation or penalties.

Employers receive a reminder to pay the ISC within 72 hours. To avoid delays, ensure all payments are completed during the CoS assignment process.

Refunds and Adjustments

Refunds may be available under specific conditions:

• Full Refunds:
  • The worker’s visa application is refused or withdrawn.
  • The CoS is unused, or the worker does not start employment.
• Partial Refunds:
  • The worker leaves employment earlier than the visa duration.
  • A small sponsor mistakenly pays the large sponsor charge.

Refunds are processed within 90 days through the SMS. However, the CoS fee is non-refundable once assigned, even if the worker does not use it.

‍

How Is the Immigration Skills Charge Used?

In the 2021–22 financial year, the ISC generated £349 million, which was allocated to skills training initiatives across the UK. However, there has been criticism about the lack of transparency in how these funds address the UK’s skills gap.

Challenges and Criticisms of the ISC

• Financial Burden: Small and charitable organisations often struggle with ISC costs, especially alongside other sponsor licence fees.
• Misalignment With Workforce Needs: In sectors like healthcare, facing critical staff shortages, the ISC can be a barrier. Consider using the health and care worker visa for exempt routes.
• Lack of Transparency: Employers often question how effectively ISC funds address the UK’s skills gap.

Tips for Managing ISC Costs

• Plan Budgets: Include ISC costs along with government fees such as certificate of sponsorship costs.
• Leverage Exemptions: Assess eligibility for ISC exemptions to minimise costs.
• Seek Expert Guidance: Consult immigration specialists to ensure compliance and streamline recruitment strategies.

For more information, visit the Sponsor Management System guide or contact us for tailored advice.

Conclusion

The ISC is a significant financial consideration for employers hiring internationally. While it adds to sponsorship costs, understanding its purpose, fees, and exemptions ensures effective planning and compliance.

Need help managing ISC complexities or other sponsor licence duties? Get in touch with our team for expert advice.