The Immigration Skills Charge (ISC) is a fee imposed on UK employers who sponsor certain categories of migrant workers under the UK’s points-based immigration system. Introduced on 6 April 2017 under the Immigration Skills Charge Regulations 2017 made pursuant to section 70 of the Immigration Act 2014, the ISC was designed to encourage employers to train and upskill the resident workforce while also serving as a financial control on the volume of overseas workers entering the UK labour market.
What this article is about: This guide explains the purpose of the Immigration Skills Charge, when and how it applies, the rates payable, exemptions, compliance obligations, and the practical implications for UK employers. By the end, you will understand your organisation’s responsibilities, how to avoid unnecessary costs, and the compliance risks involved.
Section A: What is the Immigration Skills Charge?
The Immigration Skills Charge (ISC) is a levy payable by UK employers each time they sponsor a migrant worker under eligible visa routes. The charge was introduced under the Immigration Skills Charge Regulations 2017, made under section 70 of the Immigration Act 2014, and took effect from 6 April 2017.
The UK government’s stated aim in introducing the ISC was to reduce reliance on migrant workers and encourage UK businesses to invest more heavily in training domestic workers. It also serves as a funding mechanism, with revenues allocated towards programmes designed to upskill the resident labour market.
1. Definition and Purpose
The ISC is a statutory levy applied to certain sponsorship applications made by UK employers. Each time an employer assigns a Certificate of Sponsorship (CoS) to a worker in an eligible category, the ISC must be paid.
Its purpose is twofold:
- To incentivise employers to look first to the domestic labour force rather than sponsoring overseas workers.
- To provide the government with additional funds to support skills development and apprenticeships in the UK workforce.
In practice, this means that the ISC is both a cost-management tool and a policy instrument aimed at balancing labour supply.
2. Who Must Pay the Charge?
The charge applies to most UK employers who hold a sponsor licence and wish to sponsor a worker under eligible visa categories. In particular, it applies when sponsoring individuals under:
- The Skilled Worker visa route (previously Tier 2 General).
- The Global Business Mobility – Senior or Specialist Worker route.
The ISC does not apply to all visa routes. For example, it is not payable under other Global Business Mobility sub-routes (Secondment Worker, Graduate Trainee, Service Supplier, UK Expansion Worker) or where sponsorship is temporary without ongoing employment.
The obligation to pay rests with the sponsoring employer, not the sponsored worker. The cost cannot legally be passed on to the migrant, either directly or indirectly.
3. Exemptions
Not every sponsorship attracts the ISC. There are several important exemptions, including:
- Health and Care Workers: Employers sponsoring workers on Health and Care visas are exempt. This includes nurses, midwives, care workers, and other qualifying health and social care roles.
- PhD-level occupations: Certain high-level research and academic roles are exempt to encourage innovation and recruitment at this level.
- Switching within the UK: Where a worker is switching into another eligible route within the UK and has already triggered the ISC for the same employment, a further charge may not be payable.
- Short-term visa categories: Graduate and Visitor visas, and other temporary routes, fall outside ISC liability.
These exemptions are strictly defined by the Immigration Rules and sponsor guidance. Employers must check carefully whether an exemption applies to avoid unnecessary charges or compliance breaches.
Section Summary:
The Immigration Skills Charge is a statutory levy on UK sponsors assigning Certificates of Sponsorship under eligible routes. It was introduced to encourage investment in the resident labour market and reduce reliance on overseas workers. While most sponsors of Skilled Worker and Global Business Mobility – Senior or Specialist Worker applicants must pay, important exemptions apply, particularly for Health and Care roles, PhD-level occupations, and certain switching or temporary visa cases.
Section B: Immigration Skills Charge Amounts
The amount of Immigration Skills Charge (ISC) payable depends on the size and type of sponsoring organisation, as well as the length of employment specified on the Certificate of Sponsorship. The fee is applied on a per-worker, per-year basis, meaning that the longer the visa duration, the higher the total charge.
1. Standard Charge Rates
The ISC is set at two levels, depending on whether the sponsor qualifies as a small or charitable sponsor or as a medium or large sponsor.
- Small or charitable sponsors pay £364 for the first 12 months of a worker’s visa, plus £182 for each additional six months.
- Medium or large sponsors pay £1,000 for the first 12 months, plus £500 for each additional six months.
An organisation will qualify as a small sponsor if it meets at least two of the following criteria:
- Annual turnover of £10.2 million or less.
- Total assets worth £5.1 million or less.
- No more than 50 employees.
Charities automatically qualify for the reduced ISC rate, provided they are registered in the UK with the Charity Commission or recognised as exempt.
This two-tier structure is designed to ease the financial burden on small organisations and the charitable sector while maintaining the policy purpose of the charge.
2. How the Charge is Calculated
The ISC is levied for each individual sponsored worker and is based on the length of the visa applied for. The following points are critical in understanding calculation:
- The charge is payable in full at the time of assigning the Certificate of Sponsorship.
- The cost is calculated in 12-month increments, rounded up to the nearest six months. For example, if a worker is sponsored for 18 months, the sponsor pays for two full years.
- If the worker’s visa is extended, a further ISC is payable at the time of extension.
Example: A medium-sized business sponsoring a Skilled Worker for three years will pay £3,000 (i.e. £1,000 per year). If the same worker’s visa is later extended for a further two years, the employer must pay an additional £2,000.
3. Refunds and Overpayments
In certain circumstances, sponsors may be eligible for a refund of the ISC, either in full or in part. Refunds are typically made where:
- The worker’s visa application is refused or withdrawn.
- The worker’s visa application is successful but they do not take up the employment.
- The sponsored worker leaves employment before the end of the visa period, and at least six full months remain unused.
- An overpayment has been made by the sponsor.
Refunds are not issued where the worker leaves after less than six months of their visa period, or where the sponsor withdraws sponsorship for reasons within their control. Refunds are usually processed automatically by the Home Office but sponsors should check the Sponsor Management System and retain records to ensure payments are correctly adjusted.
Section Summary:
The Immigration Skills Charge varies depending on whether the sponsor is categorised as small/charitable or medium/large. It is payable in 12-month increments, rounded up to the nearest six months, and must be paid at the point of assigning a Certificate of Sponsorship. Refunds are available in limited circumstances, but employers should not rely on them as a means of cost recovery. Careful calculation and planning are essential to avoid unnecessary costs.
Section C: Payment Process and Compliance
The Immigration Skills Charge (ISC) is an integral part of the UK’s sponsorship process. Employers must not only budget for the cost but also ensure correct payment is made in line with Home Office requirements. Failure to pay, or attempts to avoid the charge, can result in non-compliance and potential sanctions.
1. When the Charge is Paid
The ISC becomes payable when the employer assigns a Certificate of Sponsorship (CoS) to a worker under an eligible visa route. The charge is triggered as part of the CoS process within the Sponsor Management System (SMS).
Payment must be made at the point of assignment. If the ISC is not paid in full, the CoS cannot be issued and the worker will not be able to proceed with their visa application. The Home Office does not allow employers to defer or stagger payments.
This means that even where the sponsor intends to reclaim costs later through workforce budgeting or financial planning, the ISC must be paid upfront in its entirety.
2. How to Pay
The ISC is paid directly through the Sponsor Management System when assigning the CoS. The system automatically calculates the fee based on the employer’s sponsor category (small/charitable or medium/large) and the length of employment specified.
Employers must have a valid payment method available, usually a debit or credit card, when completing the CoS process. Once payment is made, an electronic receipt is generated, which should be retained for audit purposes.
It is important that sponsors input accurate employment dates when assigning a CoS, as the ISC payable will be based on this information. Any errors may result in overpayment or miscalculation, which can be difficult to rectify after submission.
3. Employer Compliance Duties
Sponsors are under a duty to comply with all aspects of the ISC framework. This includes:
- Ensuring the ISC is paid in full when required.
- Not passing the cost on to the worker, either directly or indirectly (for example, through deductions from salary).
- Accurately reporting employment start and end dates.
- Retaining evidence of ISC payments and related records for inspection.
The Home Office has the power to conduct compliance checks and audits. Failure to pay the ISC, or attempts to circumvent the rules, can lead to penalties including:
- Suspension or revocation of the sponsor licence.
- Civil penalties and fines.
- Inability to sponsor new workers until compliance issues are resolved.
Employers should treat ISC compliance as part of their broader sponsor duties, alongside record-keeping, reporting, and maintaining appropriate HR processes.
Section Summary:
The Immigration Skills Charge must be paid when assigning a Certificate of Sponsorship. The process is managed via the Sponsor Management System, with fees calculated automatically. Employers must ensure accurate information is provided and payment made in full, as failure to comply can result in serious Home Office sanctions. Sponsors should integrate ISC compliance into their wider sponsorship management framework.
Section D: Practical Considerations for Employers
For UK employers, the Immigration Skills Charge (ISC) is more than just an administrative fee. It has financial and strategic implications that need to be factored into workforce planning and compliance management. By understanding its application and exemptions, employers can minimise costs and avoid unnecessary risks.
1. Budgeting for ISC Costs
The ISC represents a significant additional cost for sponsors, particularly medium and large employers recruiting workers for multi-year visas. For example, sponsoring a Skilled Worker for five years will cost a medium-sized employer £5,000 in ISC fees alone, on top of visa application charges, Certificate of Sponsorship fees, and Immigration Health Surcharge contributions.
Employers should incorporate ISC costs into recruitment budgets at an early stage. This ensures financial approvals are obtained in advance and avoids unexpected costs later in the hiring process. Finance teams, HR departments, and recruitment managers should work together to build ISC charges into workforce planning and cost forecasting.
2. Strategic Workforce Planning
The ISC can influence employer behaviour by encouraging organisations to balance the cost of overseas recruitment with investment in training domestic workers. While the charge does not prevent sponsorship, it makes it more costly, which can affect decisions about whether to sponsor a migrant or invest in local talent development.
For sectors facing acute labour shortages, such as health and social care, exemptions from the ISC provide some relief. However, in other industries where exemptions are limited, employers may need to review long-term workforce strategies to reduce reliance on overseas sponsorship and mitigate ongoing costs.
3. Managing Exemptions Effectively
Employers can reduce their financial burden by understanding and applying exemptions correctly. For example, roles on the Health and Care visa route or certain PhD-level occupations are exempt from the ISC.
To maximise savings, HR teams should:
- Stay updated on exempt categories as they may change over time.
- Cross-check roles against the relevant SOC codes and government guidance.
- Train staff involved in the sponsorship process to identify when the ISC does not apply.
Incorrectly paying the ISC when an exemption applies leads to unnecessary costs, while failing to pay when required creates compliance risks. Accurate knowledge and record-keeping are therefore essential.
Section Summary:
Employers must treat the ISC as part of their overall immigration and workforce planning strategy. Budgeting for the charge avoids financial surprises, while strategic workforce planning helps balance costs with domestic training investment. Correctly applying exemptions can further reduce costs, but this requires careful knowledge of the rules. Employers who plan ahead and align HR and finance functions will manage ISC liabilities more effectively.
FAQs
What is the Immigration Skills Charge?
The Immigration Skills Charge (ISC) is a fee payable by UK employers each time they sponsor a migrant worker under certain visa routes. It was introduced in 2017 to encourage investment in domestic skills and reduce reliance on overseas labour.
How much is the Immigration Skills Charge?
The amount depends on the size and type of employer:
- Small or charitable sponsors: £364 for the first 12 months, then £182 for each additional six months.
- Medium or large sponsors: £1,000 for the first 12 months, then £500 for each additional six months.
Who has to pay the ISC?
Employers sponsoring workers under eligible visa categories, such as the Skilled Worker or Global Business Mobility – Senior or Specialist Worker routes, must pay the ISC when assigning a Certificate of Sponsorship.
Are there exemptions from the ISC?
Yes. Exemptions apply to Health and Care visa roles, certain PhD-level occupations, and some switching or short-term categories. Employers should always check the latest Home Office guidance before assigning a CoS.
When is the ISC paid?
It is paid at the time of assigning a Certificate of Sponsorship through the Sponsor Management System. Payment must be made in full upfront.
Can the Immigration Skills Charge be refunded?
Refunds may be issued if the visa application is refused, withdrawn, or if the sponsored worker does not start or leaves early (with at least six months of visa validity remaining). Refunds are not available if the worker leaves after less than six months.
Can an employer pass the ISC cost onto the worker?
No. The law prohibits employers from passing the ISC to sponsored workers, whether through salary deductions or reimbursement clauses. The employer must absorb the cost.
Does the ISC apply to Health and Care workers?
No. Health and Care visa roles are exempt from the ISC, recognising the acute labour shortages in the sector.
Does the ISC apply to students or graduates?
No. The Graduate visa route and student categories are not subject to the ISC.
What happens if an employer fails to pay the ISC?
Failure to pay can result in the Certificate of Sponsorship not being issued, visa applications being refused, and potential Home Office sanctions including fines or sponsor licence suspension.
Conclusion
The Immigration Skills Charge is a central element of the UK’s sponsorship framework, designed both to deter overreliance on overseas labour and to fund the development of the resident workforce. For employers, the ISC represents a significant financial and compliance consideration when sponsoring workers under eligible visa routes.
By understanding when the charge applies, the rates payable, and the available exemptions, employers can plan effectively and avoid unnecessary costs. Accurate budgeting, careful workforce planning, and robust HR compliance processes are all vital in managing ISC liabilities.
While exemptions reduce the burden for certain roles, particularly within health and social care, most sponsors must incorporate the ISC into recruitment planning. Treating the charge as part of broader immigration compliance duties will ensure employers remain on the right side of Home Office requirements and avoid the risks of penalties, licence suspension, or reputational harm.
Ultimately, the ISC reinforces the UK government’s message that sponsoring overseas workers should not replace investment in domestic skills. Employers that align their recruitment strategies with training and development initiatives will be best placed to manage costs, maintain compliance, and secure the workforce they need.
Glossary
| Term | Definition |
|---|---|
| Immigration Skills Charge (ISC) | A levy payable by UK employers when sponsoring workers under certain visa categories, designed to reduce reliance on overseas labour and fund skills training for resident workers. |
| Certificate of Sponsorship (CoS) | A digital document assigned by a licensed sponsor to a migrant worker, confirming details of the job and enabling the worker to apply for a UK visa. |
| Skilled Worker visa | A visa route that allows overseas nationals to work in eligible skilled jobs in the UK with sponsorship from a licensed employer. |
| Global Business Mobility visa | A category of visas for overseas businesses transferring staff to the UK, including the Senior or Specialist Worker route. |
| Health and Care visa | A visa route exempt from the ISC, covering eligible roles in health and social care, including nurses, midwives, and care workers. |
| Sponsor Management System (SMS) | The Home Office online system used by licensed sponsors to manage their sponsorship duties, including assigning Certificates of Sponsorship and paying the ISC. |
Useful Links
| Resource | Link |
|---|---|
| GOV.UK: Immigration Skills Charge | https://www.gov.uk/immigration-skills-charge |
| GOV.UK: Sponsor Guidance for Employers | https://www.gov.uk/government/collections/sponsorship-information-for-employers-and-educators |
| DavidsonMorris: Immigration Skills Charge | https://www.davidsonmorris.com/immigration-skills-charge/ |
| Xpats.io: Immigration Skills Charge | https://www.xpats.io/immigration-skills-charge/ |
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing & Content Agency for the Professional Services Sector.
