A further financial burden cost for Tier 2 Sponsors - The Immigration Skills Charge set to be introduced in April 2017

25 Jan 2017

The introduction of the Immigration Skills Charge (ISC) in April 2017 fits with the trend of additional burdens being placed on Tier 2 Sponsors. It is being introduced as part of the Government’s stated strategy to encourage businesses to recruit and train UK employees.

The ISC will introduce additional fees for employers looking to sponsor both new migrants and the extension of current visas under Tier 2. Here we look at how it is anticipated the ISC will apply, and the steps businesses can take now to limit its impact.

What is the amount of the ISC and when will it be payable?

The ISC will impose £1,000 per migrant per year of leave specified in an application involving large employers. Small companies or charitable organisations are expected to be able to benefit from a discounted rate of £364 per migrant per year of leave.

The ISC will be payable in respect of new visa applications, and extension applications for existing visas, from April 2017.

It is anticipated that the entire fee may need to be paid upfront at the time of the application. As it is a one off, rather than a rolling year-on-year, charge, it is not anticipated that the ISC will apply at all to businesses whose migrants are granted leave or have their leave extended prior to April 2017.

When will the ISC not apply to Tier 2 migrants?

PhD level jobs and graduates switching from Tier 4 to Tier 2 will be exempt from the charge.

What steps should businesses be taking?

In terms of planned recruitment of new sponsored migrants in the first half of this year, assuming leave can be obtained prior to April, it may be worth businesses considering sponsoring an application for five years’ leave, rather than the more common three years. This would avoid the scenario where, for example, a three year grant is obtained now, but the ISC has to be paid on a two year extension in 2020. The costs for a five year visa are higher than for three years though, and there is a risk that the migrant may not remain employed under the visa for the full five years in order to see the benefit.

Businesses with migrants whose leave expires in the middle of 2017 should consider submitting extension applications ahead of April 2017, in order to avoid this additional cost.

Going forward, the most significant exemption for most businesses in the UK appears to be via the in-country switching of Tier 4 migrants to Tier 2, which does not attract any ISC under the current rules. This route will be evermore attractive to businesses that can make use of it, and who find that there remains a shortage of sufficiently skilled settled workers in their sector.

Click here for more information on how our Business Immigration team can help you or please contact Phillip Vallon.

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