Employers take note as UK Government announces large increases in immigration and nationality fees

On 13 July 2023, the UK government planned increases to fees across a range of immigration and nationality routes including the immigration health surcharge.

The immigration health surcharge (IHS) is set to see a huge increase of around 66%. The current standard IHS rate is £624 per person per year of leave to remain granted and this will increase to £1,035. Similarly, the discounted rate for students and under-18s will increase from £470 per year to £776. The government explains that the increase to the surcharge will help to fund the pay rise for doctors promised earlier in the statement. 

It is confirmed that medical professionals in the UK with a Health and Care Worker visa will remain exempt from having to pay the IHS.

The Chief Secretary goes on to explain that IHS rates have been frozen for the past three years, despite high inflation and the wider pressures facing the economy. The position is that this planned increase will ensure that the surcharge covers the full healthcare costs of those who pay it. 

Looking back to previous increases in the IHS, it was first introduced in 2015 at a rate of £200. In January 2019, the charges were doubled to £400 per year (£300 for certain visa categories) and in October 2020, increased again to £624 per year (£470 for certain visa categories). This upcoming change will mean the IHS has increased 5-fold in the last 8 years. 

Increases to application fees for immigration and nationality applications are also planned. Exact figures are not yet confirmed, however the expected increases will be as follows:

• the cost of work visas and visit visas will increase by 15%;
• the cost of study visas, certificates of sponsorship, settlement, citizenship, wider entry clearance, leave to remain and priority visas will increase by at least 20%;
• costs for students and those using a priority service will be equalised, so that people pay the same whether they apply from within the UK or from outside the UK.

The government nods to the current record high migration numbers and alleges that these increases will better cover the cost of the migration and border system, allowing more funding to police forces.

Peter Grant MP, member of the Scottish National Party, responded to highlight that one of the biggest challenges facing the economy currently is a shortage of workers. The impact of charging those who wish to come to the UK to fill these skilled shortage roles even higher fees to make their applications is therefore likely to make the UK a less attractive option for migration. 

Although employers are not required to pay for the visa application and immigration health surcharge for workers they sponsor, it is common for employers to offer to pay for this as part of the employment package. The fee increase may mean that employers more carefully consider the cost benefit before making such offers. Many organisations currently opt to implement Clawback Agreements when sponsoring new hires- this allows businesses to claim back any costs paid to the personal benefit of the employee, often on a decreasing basis depending on how long the individual continues in their role. It may be that more employers now look to implement such agreements in light of the fee increase. 

It’s certain that these fee increases will have a strain on those living in the UK with leave to remain and any employers or sponsors who fund their applications. The uncertainty of the government’s approach to increasing fees, irregularly and by such huge margins, makes it impossible for individuals and businesses to appropriately budget for the costs of their future visa applications. 

No date has yet been provided for these increases, nor have we received full details of the exact increases to be expected. The usual government approach is to increase fees annually in April, although it seems unlikely that these increases will be delayed given they’re being announced now.  However, we will keep you posted.

Next steps

Where possible, any upcoming applications to extend leave to remain or settle in the UK should be made as soon as possible to avoid paying higher fees, if the current immigration status and route to settlement will allow for this. 

Businesses should look ahead at their recruitment needs to consider whether they continue with their existing recruitment and increase their spend/budgets or whether they should bring plans forward to avoid higher charges.

Albeit the ability to recruit and bring in under the sponsorship regime has arguably got easier in the last couple of years, these planned fee increases do make things more difficult- as a result of the government’s attempt to raise funds and reduce net migration figures.