UK Immigration Update

February 16, 2017 All, UK
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UK Immigration Update

Immigration Skills Charge  Overview The Home Office announced that the Immigration Skills Charge (ISC) will be introduced from 6 April 2017. This is to be paid by Tier 2 Sponsors…

Immigration Skills Charge

 Overview

The Home Office announced that the Immigration Skills Charge (ISC) will be introduced from 6 April 2017. This is to be paid by Tier 2 Sponsors hiring migrant workers under the Tier 2 visa route. The rationale behind this decision is to ensure that the burden of costs in running the UK immigration system rests with those who benefit directly from it – specifically, businesses in possession of Tier 2 sponsor licences — rather than UK taxpayers. The idea is to incentivise UK employers to train and upskill settled workers before turning to Tier 2 sponsorship to fill vacancies in their workforce, whilst utilising the ISC funds to “address skills gaps in the workforce” by funding training.

Who will the ISC apply to?

From 6 April 2017, the ISC will apply to the following workers sponsored under Tier 2 route:

  • those individuals applying from outside the UK;
  • those individuals applying inside the UK to switch to this category from another;
  • Tier 2 visa holders applying inside the UK to extend their existing leave.

Who will be exempt from the ISC?

Employers will be exempt from the ISC if they sponsor:

  • Tier 2 ICT Graduate Trainees;
  • Tier 2 migrants sponsored for the roles skilled to PhD level;
  • Tier 4 students switching to Tier 2 (General) route from inside the UK;
  • Tier 2 migrants sponsored before 6th April 2017, and extending their Tier 2 leave to stay with the same sponsor (including change of roles with the same sponsor);
  • Tier 2 migrants sponsored before 6th April 2017, and changing their sponsor inside the UK;
  • Tier 2 dependants

What are the costs associated with the ISC?

  • From 6 April 2017 affected employers will be required to pay £1,000 for each year a Tier 2 migrant is sponsored – for example, a Tier 2 (General) visa issued for 3 years would result in a £3,000 ISC being applied.
  • A reduced rate of £364 for each year a Tier 2 migrant is sponsored will apply to small and charitable sponsors. A company is usually considered to be ‘small’ if:

–   its annual turnover is £10.2 million or less

–   it has 50 or fewer employees

How will the ISC be paid?

The ISC will be payable in full at the time of the immigration application, and the same time when sponsors pay to assign a CoS. It is expected that the ISC will be refunded if the application is refused or withdrawn following the similar process applicable to IHS payments. We understand further details on the payment method to follow.

How will the ISC be distinguished from the Apprenticeship Levy?

The Home Office has also distinguished the ISC from the Apprenticeship Levy, which is also to be introduced from 6 April 2017. This will require all employers operating in the UK with a pay bill over £3 million each year to invest in apprenticeships. Whilst both policies are confirmed to encourage higher investment in skills by UK employers to minimise skills gaps and improve UK productivity, they will run separately. Tier 2 sponsors only will be liable to pay the ISC. The Apprenticeship Levy contribution paid by all large employers is to be spent on apprenticeship training for their employees, therefore large employers who also sponsor Tier 2 staff will pay both charges.

How we can help?

We recommend that our clients review their upcoming recruitment cycles to factor in the ISC when budgeting for potential hires who will be sponsored after March 2017. We would be happy to discuss your immigration policies and advise on potential cost saving strategies.

For further information on any part of this newsletter, please contact your dedicated Immigration Consultant via email on comms@fergusonsnell.co.uk or call us on +44 (0) 20 3668 2700