Monday, 21st August 2023

Employers should act now to prepare for visa fee increases

On 13 July 2023, the UK government announced that it was increasing the cost of UK visas. The increase will see an additional cost burden placed on employers and visa applicants. The government expects to generate over a billion pounds in revenue via the new fees, with the money earmarked to cover pay increases for public sector workers following a period of strikes and disputes.

Here is a short summary of the expected changes:

• Work and visit visa application fees will rise by 15%
• Fees for student visas, certificates of sponsorship, settlement, citizenship, wider entry clearance, permission to stay and priority service applications will increase by at least 20%
• The cost of priority services and student visas will be the same whether applicants apply inside or outside the UK.
• The main Immigration Health Surcharge (IHS) rate is also likely to increase to £1,035 per year (currently £624), with the discounted rate for students and those under 18 is rising from £470 to £776 per year.

The IHS is a mandatory tax on sponsors that ensures applicants can access the NHS in the UK. There are a few exemptions to paying the surcharge; for example, Health and Social Care Visa workers do not pay this tax.

What should employers do now?

The implementation date for the increase has yet to be confirmed. However, the changes could happen as early as late summer or early autumn 2023 when Parliament resumes.

There is no doubt that some employers who rely on foreign national workers will struggle with the increased costs, especially amid a cost-of-living crisis. As such, we advise relevant employers to take the following steps to minimise the impact as much as possible:

• Review upcoming recruitment plans and (where possible) encourage workers to make their visa applications early, before the fee changes take effect.
• Evaluate their visa application procedures. For example, while the IHS surcharge is payable by the applicant, not the sponsor, some businesses agree to pay this as part of the recruitment package. Employers may need to consider whether they can continue to do this.
• Implement ‘clawback agreements’ which require employees to repay specific immigration fees if they leave their jobs early. A specialist lawyer must draft these agreements to ensure they are legally enforceable.
• Factor in the higher costs in their wider budgetary planning.

 

If you require further information about anything covered in this briefing, please contact Aoife Reid or your usual contact at the firm on +44 (0)20 7526 6000.

This article is for general purpose and guidance only and does not constitute legal advice.  It should not replace legal advice tailored to your specific circumstances.