The Home Office have released further details about the Immigration Skills Charge, the statutory charge of up to £5,000 which will be imposed upon Tier 2 sponsors for each worker they sponsor.

As previously announced, the Skills Charge is expected to come into force on 6 April 2017. The latest announcement, published as an addendum to the Tier 2 and Tier 5 Sponsor Guidance, confirms that a charge of up to £1,000 per year will be payable by sponsors when they assign a Certificate of Sponsorship in either the Tier 2 (General) or Tier 2 (Intra-company Transfer) categories to migrant workers from outside the European Economic Area (EEA).

The new guidance confirms that exemptions from the Skills Charge will apply where the sponsored worker is:

  • a non-EEA national sponsored in Tier 2 before 6 April 2017 who is applying from inside the UK to extend their Tier 2 stay with either the same sponsor or a different sponsor
  • a Tier 2 (Intra-company Transfer) Graduate Traine
  • a worker being sponsored for a role in a specified PhD level occupation
  • a Tier 4 student in the UK switching to the Tier 2 (General) category

How could this affect sponsors?

The first of those exemptions goes further than was previously expected as it covers Tier 2 migrants already in the UK whether or not they are extending with the same sponsor or switching to a new sponsor. This will come as a welcome relief to sponsors with existing Tier 2 sponsored migrants who will need to extend their stay before they are eligible for indefinite leave to remain.

The Skills Charge will be reduced to £364 per year for small or charitable sponsors. It appears that the Home Office will be adopting the definition of small businesses set out in the Companies Act. Therefore, businesses which benefit from the audit exemption laid out in the Companies Act 2006 will pay the lower fee. Nevertheless, the introduction of the Skills Charge represents a significant additional cost, particularly given that it must be paid in full at the point when the Certificate of Sponsorship is assigned.

Certificates of Sponsorship can be assigned for up to five years at a time and so a sponsor, which is either a medium or large business, that wants to sponsor a migrant worker for the maximum permissible period, and cannot rely on one of the exemptions outlined above, will need to pay £5,000 when they assign the Certificate of Sponsorship. This expense is in addition to the many other costs associated with Tier 2 sponsorship and visa applications, including the fee for assigning a Certificate of Sponsorship, visa application fees, the Immigration Health Surcharge (scheduled to be extended to Intra-company Transfers from 6 April 2017), and additional expenses which may be incurred as required such as testing for tuberculosis, English language testing, fees for priority visa processing and obtaining overseas criminal record certificates.

Employers who offer to meet some or all of these expenses on behalf of their sponsored employees are therefore advised to revisit the clawback provisions in their employment contracts in order to protect themselves in the event a sponsored worker leaves their employment earlier than anticipated.