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From 20265, the Immigration Skills Charge rises by 32%—here's what every UK employer must know.
The UK government has announced the most significant change to immigration employer costs since 2017. The Immigration Skills Charge (ISC) will increase by 32% following the publication of the Immigration White Paper on May 12, 2025. This represents the first adjustment since the charge's introduction, impacting thousands of UK employers who sponsor skilled workers.
For businesses relying on international talent, this change demands immediate attention. The ISC directly affects your bottom line when hiring through the Skilled Worker visa, Senior or Specialist Worker visa, and Health and Care Worker visa routes. Understanding these changes isn't just about compliance; it's about protecting your recruitment strategy and budget planning.
This comprehensive guide everything you need to know about the 2026 ISC increases, exemptions, and practical compliance strategies.
What Is the Immigration Skills Charge?
The Immigration Skills Charge is a mandatory fee that UK employers must pay when sponsoring non-UK workers under specific visa routes. Introduced on April 6, 2017, under the Immigration Skills Charge Regulations, the ISC aims to reduce reliance on migrant labour by incentivising investment in the UK's domestic workforce.
The charge applies specifically when you sponsor workers for:
- Skilled Worker visas
- Global Business Mobility: Senior or Specialist Worker visas
- Health and Care Worker visas
Think of the ISC as the government's way of ensuring that businesses contribute to UK skills development when they recruit internationally. Funds raised from the ISC are directed to the Department for Education to support training and skills development.
The charge is completely separate from visa application fees, sponsor licence costs, and the Immigration Health Surcharge. You cannot pass this cost to your sponsored employee—it's entirely the employer's responsibility.
Why Has the Charge Increased in 2026?
The 32% increase comes after seven years without any adjustment, with the government citing inflation and a push to boost domestic workforce investment. The Immigration White Paper specifically states that rates needed updating to account for inflation since 2017.
Three key drivers behind the increase:
Inflation catch-up: The charge hasn't been reviewed since 2017, meaning it's significantly below what it would be in today's money.
Skills investment priority: The government wants to "restore confidence in the immigration system" and ensure immigration supports rather than replaces domestic skills development.
Revenue generation: The ISC has already raised more than £1.5bn since its introduction, funding that directly supports UK training programmes.
This increase forms part of broader immigration reforms aimed at reducing net migration, which rose from 224,000 in June 2019 to 906,000 in June 2024.
Who Pays the Immigration Skills Charge and When?
You must pay the ISC if you're sponsoring someone who:
- Will work in the UK for six months or longer
- Is applying from outside the UK for any duration
- Is already in the UK and extending their stay
Payment timing is straightforward: You pay the immigration skills charge when you assign a certificate of sponsorship to the worker. This happens before the employee can even apply for a visa.
Visa routes that trigger ISC payments:
- Skilled Worker visa (most common)
- Global Business Mobility: Senior or Specialist Worker visa
- Health and Care Worker visa
The charge covers the entire duration specified on the Certificate of Sponsorship, not just the initial period. If you extend someone's employment, you'll need to pay additional charges for the extended period.
ISC Rates 2025: Before and After the Increase
Here's how the 32% increase affects your costs:
Current Rates (Until Implementation)
| Company Size | First 12 Months | Each Additional 6 Months | Maximum (5 Years) |
|---|---|---|---|
| Large/Medium Employers | £1,000 | £500 | £5,000 |
| Small Employers/Charities | £364 | £182 | £1,820 |
New Rates (After 32% Increase)
| Company Size | First 12 Months | Each Additional 6 Months | Maximum (5 Years) |
|---|---|---|---|
| Large/Medium Employers | £1,320 | £660 | £6,600 |
| Small Employers/Charities | £480 | £240 | £2,400 |
Example calculation for a 3-year sponsorship:
- Large employer: £1,320 (year 1) + £660 (6 months) + £660 (6 months) + £660 (6 months) + £660 (6 months) = £3,960
- Small employer: £480 (year 1) + £240 (6 months) + £240 (6 months) + £240 (6 months) + £240 (6 months) = £1,440
The implementation date for these new rates hasn't been confirmed, but employers should expect changes within the coming weeks.
Are You a Small or Large Employer?
You're usually classified as a small sponsor if at least 2 of the following apply:
Small company criteria:
- Turnover: £10.2 million or less
- Balance sheet total: £5.1 million or less
- Employees: 50 or fewer
Automatic small sponsor status:
- Registered charities
- Educational institutions
- Start-ups less than 2 years old
Immigration Skills Charge Exemptions and Reliefs
Several important exemptions can significantly reduce your ISC liability:
Occupation-Based Exemptions
You don't pay ISC for roles with these SOC codes:
- Ministers of religion and related occupations
- Scientists and research professionals in specific roles
- Arts officers, producers and directors
- Sports coaches, instructors and officials
Visa Route Exemptions
Student visa switchers: Employers do not need to pay the ISC if sponsoring an individual who is switching from a Student visa to a Skilled Worker visa while inside the UK.
Short-term assignments: No charge applies for workers employed for less than six months.
Intra-company transfers: EU nationals under the Global Business Mobility route are exempt if the CoS was assigned after January 1, 2023, and the worker will be in the UK for up to three years.
PhD-Level Roles
Workers in PhD-level occupations are completely exempt from ISC charges, regardless of company size or employment duration.
ISC Refunds and Adjustments: When You Get Money Back
The Home Office provides refunds in several scenarios:
Full Refunds Available When:
- Visa application refused: Complete refund if the worker's visa is denied
- Application withdrawn: Full refund if the worker withdraws their application
- Worker doesn't start: Refund if the employee never begins employment
- Certificate expires unused: Full refund if the CoS isn't used for a visa application
Partial Refunds Available For:
- Early departure: Pro-rata refund if the worker leaves before their certificate end date
- Sponsor size reclassification: Refund difference if you paid large employer rates but qualified as small
- Reduced employment period: Partial refund for shortened assignments
Refund timeline: UKVI will contact you if you do not pay the charge or pay the wrong amount. You'll have 10 working days to pay the charge—the worker's visa application will be refused if you do not.
The refund process typically takes 90 days from the qualifying event. Keep detailed records of all payments and circumstances to ensure smooth refund processing.
Practical Compliance Tips for UK Employers
1. Conduct Regular Classification Audits
Review your company size status annually. Changes in turnover, employees, or balance sheet can affect your ISC rate. Notify UKVI immediately if you become eligible for small sponsor rates.
2. Integrate ISC into Budget Planning
Calculate total sponsorship costs including:
- ISC charges (new rates)
- Sponsor licence fees (£1,579 large, £574 small)
- Certificate of Sponsorship fees (£525 per worker)
- Visa application fees
- Immigration Health Surcharge
- Legal and relocation costs
3. Automate Compliance Tracking
Use your Sponsor Management System (SMS) to:
- Track ISC payments per worker
- Monitor certificate expiry dates
- Calculate refund entitlements
- Maintain compliance records
4. Stay Updated on Policy Changes
Subscribe to Home Office guidance updates. Immigration rules change frequently, and new exemptions or rate adjustments can significantly impact your costs.
5. Leverage Available Exemptions
Before assigning any Certificate of Sponsorship:
- Check SOC codes for exemptions
- Verify worker's current visa status
- Confirm employment duration
- Review company classification
Immigration Skills Charge in 2026 Reforms
The ISC increase forms part of comprehensive immigration reforms announced in the 2026 Immigration White Paper. The government aims to "reverse the four-fold increase in net migration" and "see net migration come down further and faster over time to sustainable levels".
Other significant changes include:
- Settlement period extension: Qualifying period for indefinite leave to remain increasing from 5 to 10 years
- Graduate visa reduction: Graduate route shortened from 2 years to 18 months
- Salary threshold increases: Minimum salary requirements for sponsored workers rising
- Enhanced compliance monitoring: Stricter sponsor licence compliance requirements
These changes collectively signal the government's intention to make employer-sponsored immigration more expensive and administratively complex. As one expert noted, The UK's immigration system is already the most expensive in the world with total costs for a five-year sponsored worker potentially reaching £31,000.
Preparing Your Business for the ISC Increase
The 32% Immigration Skills Charge increase represents a significant cost escalation for UK employers. With large employers facing an additional £320 per worker in the first year alone, strategic planning is essential.
Immediate action steps:
- Audit your current sponsored workforce to understand total ISC exposure
- Review your company size classification to ensure you're paying correct rates
- Update recruitment budgets to reflect new ISC costs
- Consider timing of future sponsorships if the increase isn't yet implemented
The broader immigration reform context suggests this is just the beginning of increased costs and complexity. Employers who proactively adapt their recruitment strategies and compliance processes will be best positioned to navigate these changes.
At Westend Consultant, we provide comprehensive immigration compliance support, helping employers navigate sponsor licence requirements, ISC calculations, and strategic workforce planning. Our team has successfully guided over 1,000 businesses through complex immigration challenges, ensuring compliance while minimising costs.
Book a free consultation with our immigration experts to review your ISC exposure, explore available exemptions, and develop a cost-effective compliance strategy. Contact us today to protect your business from unexpected immigration costs.