413: UK immigration update: Substantial changes to immigration fees

The headline changes

On 13 July 2023 the Government announced proposed changes to substantially increase immigration fees. The headline fee changes are as follows:

• work and visit visa fees are to be increased by 15%;
• study visas, certificates of sponsorship, extensions, settlement and citizenship application fees will be increased by 20%, as well as for visa renewals for leave to remain on the 10-year settlement route; and
• the Immigration Health Surcharge rate will rise to £1,035, with the lower rate for students and applicants under 18 rising to £776 . These figures are per person per year and apply to family members of migrants and British citizens.

The exact details of the new fees and the date on which they will be introduced have not yet been published.

What this means for employers

The impact of these uplifts for employers could include:

• increased direct costs for sponsoring an overseas worker;
• more frequent use of immigration fee clawback agreements where employers pay immigration visa fees upfront on behalf of employees;
• cancellation or deferral of relocation to the UK due to the higher cost;
• further pressure on an already tight labour market if overseas workers are deterred from coming to the UK by the higher cost involved in relocating here; and
• increased requests for financial assistance from existing overseas employees who cannot afford to pay immigration-related fees.

As noted above, the implementation date of these changes is yet to be confirmed. However, employers should encourage staff to make visa applications early wherever possible. Consideration should also be given to adjusting recruitment budgets and policies to factor in increased costs.

Comment

While these fee increases are an easy source of income for the public purse in the short term, they will impose huge challenges on overseas workers and their families. The Government has said that the increases will be earmarked to partly fund the previously announced pay rise for doctors and other public sector workers (the additional fees are estimated to be in excess of £1 billion). However, the UK already has some of the highest immigration fees in Europe. To what extent this move is an essential revenue-raiser or, on the other hand, whether the UK is now pricing itself out of the international labour and study markets remains to be seen.