Immigration Skills Charge UK

The Immigration Skills Charge (ISC) is a levy imposed on UK employers when they sponsor migrant workers under certain visa categories. First introduced in April 2017, the ISC forms part of the government’s strategy to encourage businesses to invest in training the UK workforce while still providing access to skilled talent from overseas where necessary. For employers, understanding when the charge applies, how much it costs, and how to comply with the rules is crucial to avoid non-compliance and unexpected financial exposure.

What this article is about: This guide explains the Immigration Skills Charge in detail. It covers the legal framework, when and how the charge is applied, the current cost levels, exemptions, refund rules, and the compliance obligations that employers must meet. It is intended to support UK employers who hold or are considering applying for a sponsor licence, helping them to budget effectively, meet their immigration duties, and avoid Home Office enforcement risks.

Section A: What is the Immigration Skills Charge?

1. Definition and Purpose

The ISC is not a tax on workers but a charge levied on sponsoring employers. It applies to each Certificate of Sponsorship (CoS) that an employer issues under the relevant visa categories. The purpose is twofold: to act as a financial deterrent against long-term reliance on overseas recruitment and to fund initiatives aimed at upskilling domestic workers. In effect, the ISC seeks to balance the benefits of skilled migration with the government’s policy commitment to developing the UK labour market.

2. When the Charge Applies

The charge is triggered when an employer assigns a Certificate of Sponsorship to a migrant worker under either the Skilled Worker route, the Senior or Specialist Worker route of the Global Business Mobility visa, or another Global Business Mobility category where the ISC applies. The amount payable depends on the size and type of sponsoring organisation and the length of sponsorship being granted. The ISC must be paid upfront at the time of assigning the CoS. The charge covers the full duration of the sponsorship, with fees calculated in line with the number of years requested on the CoS.

Importantly, the charge applies both to initial visa applications and to extensions where the sponsorship continues. Employers sponsoring a worker for three years, for example, will incur a higher ISC than if sponsoring for one year, since the levy is charged per year of sponsorship.

3. Legal Consequences of Non-Payment

Failure to pay the ISC when required will result in the Certificate of Sponsorship being invalid. This, in turn, will cause the visa application to be refused. For sponsors, non-payment can also lead to compliance issues with the Home Office, as the ISC forms part of the mandatory duties attached to holding a sponsor licence. Sponsors that repeatedly fail to meet their obligations risk enforcement action, which can include licence downgrading, suspension, or even revocation. The consequences of non-payment are therefore serious, both for the worker, who cannot obtain their visa, and for the employer, who may lose their ability to sponsor workers in future.

Section Summary
The Immigration Skills Charge is a statutory levy designed to reduce reliance on overseas labour and encourage training of the UK workforce. It applies when assigning a Certificate of Sponsorship under specific visa categories, must be paid upfront, and failure to comply risks both visa refusal and sponsor licence sanctions.

Section B: How Much is the Immigration Skills Charge?

The cost of the Immigration Skills Charge depends on the size and type of the sponsoring organisation, as well as the length of employment being sponsored. The Home Office sets standard rates that are payable each time a Certificate of Sponsorship is assigned under a visa route subject to the charge. Employers must budget carefully, as the ISC can represent a significant additional cost on top of visa fees and other sponsorship-related expenses.

1. Current Rates

The rates are structured according to whether the sponsoring organisation qualifies as a “large” sponsor or a “small or charitable” sponsor.

• Large sponsors: £1,000 per sponsored worker for each year of sponsorship
• Small or charitable sponsors: £364 per sponsored worker for each year of sponsorship

An organisation is considered a small sponsor if it meets at least two of the following criteria: annual turnover of £10.2 million or less, total assets worth £5.1 million or less, or no more than 50 employees. Registered charities automatically qualify as small sponsors.

2. Period of Liability

The Immigration Skills Charge is calculated based on the period stated on the Certificate of Sponsorship. It is applied in six-month increments, meaning sponsors pay the charge for each full or partial six-month period of sponsorship.

• Sponsoring a worker for 12 months would trigger an ISC of £1,000 for a large sponsor or £364 for a small/charitable sponsor.
• Sponsoring for three years would cost £3,000 for a large sponsor or £1,092 for a small/charitable sponsor.
• Sponsoring for five years would cost £5,000 for a large sponsor or £1,820 for a small/charitable sponsor.

The charge is payable upfront when assigning the CoS. If the sponsorship ends earlier than anticipated, a partial refund may be due.

3. Refunds and Overpayments

Employers may be eligible for a refund of part or all of the ISC in certain circumstances. Refunds are typically available if:

• The worker’s visa application is refused or withdrawn.
• The worker does not start employment.
• The sponsorship ends earlier than stated on the CoS.
• The ISC was paid in error or an overpayment was made.

Refunds are not issued automatically and must be processed by the Home Office. Sponsors should keep accurate records of payments and monitor the employment status of sponsored workers to ensure they claim refunds where appropriate. Refunds are usually processed within 90 days, but timescales can vary. If a worker leaves their role after more than 12 months of sponsorship, only the unused full years of the CoS period are refunded.

Section Summary
The Immigration Skills Charge is calculated according to sponsor size and the length of sponsorship. Large sponsors pay £1,000 per worker per year, while small or charitable sponsors pay £364. The charge is paid upfront in six-month increments, with partial refunds available if the sponsorship does not proceed as planned.

Section C: Exemptions from the Immigration Skills Charge

While most employers sponsoring skilled workers will be required to pay the Immigration Skills Charge, there are important exemptions that can significantly reduce the financial burden of sponsorship. It is critical that sponsors understand these exemptions and apply them correctly, as misapplying an exemption can result in compliance issues and potentially invalidate a Certificate of Sponsorship.

1. Exempt Categories

The Home Office rules specify a number of situations where the ISC does not apply. These include:

• Switching from Student or Graduate visas: If a worker is switching from a Student or Graduate visa to a Skilled Worker visa, the ISC does not apply. This exemption is designed to encourage UK-educated graduates to remain in the UK labour market.
• Specified PhD-level roles: Certain occupations coded at PhD level on the Standard Occupational Classification (SOC) list are exempt. This reflects the government’s policy to attract and retain highly skilled researchers and academics.
• Health & Care Worker visas: Migrants sponsored under the Health and Care Worker sub-route of the Skilled Worker visa are exempt from the ISC. The exemption does not extend to all healthcare roles, only those that qualify under the Health and Care route.
• Graduate Trainee route: Workers sponsored under the Graduate Trainee sub-route of the Global Business Mobility category are exempt.

2. Employer Responsibilities in Claiming Exemptions

Employers are responsible for ensuring that the correct exemption is applied when assigning a Certificate of Sponsorship. This requires accurate coding of the role on the CoS, verifying that the exemption applies, and retaining evidence to support the decision in case of a compliance audit. For example, when relying on the student-to-Skilled Worker exemption, sponsors should keep a copy of the worker’s previous visa grant confirming their status.

3. Common Errors and Compliance Risks

One of the most common errors sponsors make is assuming that all healthcare roles are exempt without checking whether the specific role qualifies under the Health and Care visa sub-route. Similarly, employers sometimes misapply the PhD-level exemption by assigning an incorrect SOC code. Such errors can lead to the Home Office rejecting the CoS or even taking compliance action against the sponsor. In the most serious cases, this can jeopardise the employer’s sponsor licence.

Sponsors should therefore adopt a cautious approach, ensuring HR teams are properly trained on exemptions and double-checking eligibility before claiming relief from the charge.

Section Summary
Exemptions from the Immigration Skills Charge apply in limited circumstances, including for student visa switchers, PhD-level roles, Health and Care visas, and Graduate Trainee routes. Employers must apply exemptions carefully and retain appropriate evidence, as mistakes can create compliance risks and affect the validity of sponsorship.

Section D: Employer Compliance and Best Practice

Paying the Immigration Skills Charge correctly is not only a financial responsibility but also a critical compliance duty for sponsor licence holders. Employers that integrate ISC obligations into their recruitment and HR systems are less likely to face enforcement action and can plan more effectively for the costs associated with sponsoring overseas workers.

1. Sponsor Licence Obligations

Holding a sponsor licence comes with wide-ranging compliance duties, including the correct payment of the Immigration Skills Charge where applicable. When assigning a Certificate of Sponsorship, the sponsor is legally required to pay the ISC upfront if the worker and visa category fall within scope. Failure to do so will result in the CoS being invalid.

The Home Office regards ISC payment as an integral part of the sponsorship system. Non-payment or repeated payment errors may lead to a licence being downgraded, suspended, or revoked. It is also unlawful to require or allow the sponsored worker to bear the cost of the ISC, whether directly or indirectly through salary deductions or repayment clauses. Sponsors are expected to have internal processes in place to check whether a charge applies, calculate the correct amount, and ensure prompt payment.

2. Financial Planning and Workforce Strategy

The ISC can represent a significant expense for employers, especially for larger sponsors with multiple overseas workers. Employers should factor ISC costs into workforce planning and budget forecasts. For long-term recruitment strategies, HR and finance teams should work together to assess whether the cost of sponsorship is balanced against the benefits of recruiting from overseas.

Some employers use the ISC as a driver for investing more heavily in domestic training and apprenticeship programmes, while others may adjust recruitment strategies to focus on exempt categories such as graduates or health and care roles. The ISC therefore plays an important role in shaping workforce strategy.

3. Record-Keeping and Audit Readiness

Sponsors must keep accurate records of ISC payments, including receipts and any evidence relied upon for exemptions. These records should be stored securely and be accessible in the event of a Home Office compliance audit. Good practice includes maintaining a centralised log of all Certificates of Sponsorship issued, the ISC paid, and any exemptions claimed, together with supporting documents.

By preparing for potential audits, employers reduce the risk of compliance findings that could threaten their ability to sponsor workers. Proactive record-keeping also ensures that refunds can be claimed promptly where applicable, as the Home Office may require evidence before processing a repayment.

Section Summary
Employers must treat the Immigration Skills Charge as a core part of their sponsorship duties. Compliance requires timely payment, accurate record-keeping, adherence to the prohibition on passing costs to workers, and financial planning to integrate ISC costs into broader recruitment strategies. By embedding these practices, sponsors minimise risk and strengthen their position in any Home Office audit.

FAQs

Who pays the Immigration Skills Charge?
The charge must be paid by the sponsoring employer at the point of assigning a Certificate of Sponsorship. It cannot be transferred to or recovered from the sponsored worker, either directly or indirectly.

Can the ISC be passed on to the sponsored worker?
No. The Immigration Skills Charge is the responsibility of the sponsoring organisation. Attempting to pass this cost onto the worker breaches sponsorship rules and may lead to compliance action.

How do I know if my organisation qualifies as a small or charitable sponsor?
You qualify as a small sponsor if you meet two of the following: annual turnover of £10.2 million or less, total assets of £5.1 million or less, or 50 or fewer employees. Registered charities automatically qualify as small sponsors.

What happens if I fail to pay the ISC?
Failure to pay means the Certificate of Sponsorship will not be valid, resulting in the worker’s visa application being refused. It also places the sponsor at risk of Home Office enforcement action, which may include suspension or revocation of the sponsor licence.

Is the ISC refundable if the worker leaves early?
Yes, refunds are available in certain cases, such as if the worker’s visa is refused, the worker does not start employment, or employment ends earlier than the CoS period. Refunds are made for the unused full years of sponsorship, not for part-years already completed.

Conclusion

The Immigration Skills Charge is a core component of the UK’s sponsorship system, designed both to raise funds for domestic workforce development and to encourage employers to reduce reliance on overseas recruitment. For sponsoring employers, the charge represents a significant financial obligation, and its correct application is a critical aspect of sponsor licence compliance.

Employers must ensure that the charge is paid in full whenever it applies, that exemptions are claimed correctly with supporting evidence, and that accurate records are kept to demonstrate compliance. The ISC should also be factored into wider workforce and financial planning, particularly for businesses that rely on long-term overseas recruitment.

By treating the ISC as part of a structured compliance strategy and embedding it into recruitment processes and sponsor management systems, employers not only remain compliant with the Home Office but also maintain control over the financial implications of sponsorship. Understanding how the charge works, when it applies, and how to manage it effectively is essential to sustaining lawful and cost-effective access to global talent.

FAQs

Who pays the Immigration Skills Charge?
The charge must be paid by the sponsoring employer at the point of assigning a Certificate of Sponsorship. It cannot be transferred to or recovered from the sponsored worker, either directly or indirectly.

Can the ISC be passed on to the sponsored worker?
No. The Immigration Skills Charge is the responsibility of the sponsoring organisation. Attempting to pass this cost onto the worker breaches sponsorship rules and may lead to compliance action.

How do I know if my organisation qualifies as a small or charitable sponsor?
You qualify as a small sponsor if you meet two of the following: annual turnover of £10.2 million or less, total assets of £5.1 million or less, or 50 or fewer employees. Registered charities automatically qualify as small sponsors.

What happens if I fail to pay the ISC?
Failure to pay means the Certificate of Sponsorship will not be valid, resulting in the worker’s visa application being refused. It also places the sponsor at risk of Home Office enforcement action, which may include suspension or revocation of the sponsor licence.

Is the ISC refundable if the worker leaves early?
Yes, refunds are available in certain cases, such as if the worker’s visa is refused, the worker does not start employment, or employment ends earlier than the CoS period. Refunds are made for the unused full years of sponsorship, not for part-years already completed.

Conclusion

The Immigration Skills Charge is a core component of the UK’s sponsorship system, designed both to raise funds for domestic workforce development and to encourage employers to reduce reliance on overseas recruitment. For sponsoring employers, the charge represents a significant financial obligation, and its correct application is a critical aspect of sponsor licence compliance.

Employers must ensure that the charge is paid in full whenever it applies, that exemptions are claimed correctly with supporting evidence, and that accurate records are kept to demonstrate compliance. The ISC should also be factored into wider workforce and financial planning, particularly for businesses that rely on long-term overseas recruitment.

By treating the ISC as part of a structured compliance strategy and embedding it into recruitment processes and sponsor management systems, employers not only remain compliant with the Home Office but also maintain control over the financial implications of sponsorship. Understanding how the charge works, when it applies, and how to manage it effectively is essential to sustaining lawful and cost-effective access to global talent.

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