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July’s Employment Law Digest – Government announces significant increases to immigration fees

On 13 July 2023, the Government announced a number of unwelcome fee increases relating to fees for immigration applications, as well an increase to the Immigration Health Surcharge ('IHS').

The Immigration Health Surcharge (‘IHS’) is a fee levied by the Government on almost all immigration applications made outside, or within the UK, with some exceptions. It was introduced in 2015 to ensure a contribution by foreign migrants, to the running costs of the NHS across the UK and reflective of the fact that non-visiting migrants to the UK are able to gain access to the NHS and medical treatment free of charge at the point of use.

The IHS is calculated on the basis of the length of a person’s visa and is payable upfront when making the visa application. It remains payable, even where the individual holds private health insurance and/or is entering or remaining in the UK to work and will be paying income tax and National Insurance Contributions.

The recent announcement confirms that the normal rate for the IHS will increase by a huge 66% from £624 to £1,035 per year, with the discounted rate for students, children and youth mobility visa holders increasing from £470 to £776 per year.

Further fee increases announced include the fees for work and visit visas to rise by 15%.   By way of an example, the fee for a Skilled Worker to enter the UK for a period of up to 3 years, in a non-shortage occupation role, is currently £625, which will increase to £718.75. There will also be a 20% increase in the fee payable by the employer to sponsor a worker for the Skilled Worker visa. This is currently £199 per worker but will increase to c.£240.

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The likely implications

As a result of the proposed increases, we are likely to see an uptick in the use of clawback agreements by employers, particularly for those holding sponsor licences and sponsoring individuals to work for them in the UK.

The use of these agreements is already popular where the employer agrees to pay the visa and IHS costs but insists on repayment where the employee leaves before a certain period of time.

Alternatives to clawback agreements can for example, be by way of employee loans where the employer loans the employee the funds for visa and related fees on the basis of a salary sacrifice, or otherwise.

We also anticipate seeing an increase in the number of individuals applying for immigration fee and IHS fee waivers on the basis they cannot afford to pay all or part on the increased fees.

Whilst the Government continues to toy with the reinstatement of a cap on numbers of migrants permitted into the UK, time will tell whether increasing immigration and related fees will price the UK out of the international migrant market.

The Government has not yet indicated when the fee increases will come into effect – we will of course keep you updated with our Employment Digest.

Should you require any further information on these recent announcements, or in the areas of Immigration law, please do not hesitate to contact a member of the team.


Contact a specialist

Flora Mewies

Partner | Employment & Head of Immigration

+44 (0) 330 137 3156

+44 (0) 752 522 5480

Email Flora Mewies

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Claire Hutchinson

Solicitor | Employment

+44 (0)330 137 3180

+44 (0)759 578 1841

Email Claire Hutchinson

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