The Immigration Act 2016 introduced a change which will significantly increase the cost of many Tier 2 applications in the form of a Skills Charge. The new charge was originally announced in March 2016 and is scheduled to come into force in April this year.

The Immigration Skills Charge is intended to “…incentivise employers to invest in training British staff”. The form of the incentive is that Tier 2 immigration applications will cost much more by a charge of £1,000 per sponsored employee per year of sponsorship. There is a reduced fee of £364 (again per sponsored worker per year of sponsorship) for small and charitable sponsors, with exemptions in categories involving graduate trainees, PhD-level roles and graduates switching immigration status.

Two further changes will make it more expensive to sponsor some employees from April onwards. The minimum salary rate which must be paid to ‘experienced workers’ within the Tier 2 (General) immigration category will rise to £30,000 per annum. The new minimum salary for most Tier 2 (Intra-Company Transfer) applicants is set at £41,500.

It has not been yet specified whether the Immigration Skills Charge will apply to those seeking extensions of stay in the UK but we expect so as this was the case when the Immigration Health Surcharge was introduced in 2014.

The mode of collection of the Immigration Skills Charge is also not yet known. The Immigration Health Surcharge operates as an extra application fee, payable by the individual applicant at the time the visa or Biometric Permit is sought. An alternative mode of collection, currently utilised by the Construction Industry Training Board, is a Levy and Grant system, whereby the industry body collects the relevant funds and invests suitably in apprenticeships or training. That is specifically designed to achieve training objectives in the industry and could be collected with less direct involvement from UK Visas and Immigration. However the most likely outcome is payment by the sponsor at the time the certificate of sponsorship is issued.

Immigration fees have increased rapidly in recent years and this effectively adds a further £1,000 per year to the application cost for many employers both for new hires and extensions.

Sponsors should ensure that the new costs are factored into budget for 2017/2018 and may wish to consider if new Tier 2 processes can be commenced by the issue of the certificate before the end of the financial year.