If you’re a UK employer looking to sponsor an overseas worker, there’s a fee you’ve probably stumbled across that made your eyes water a little: the Immigration Skills Charge, or ISC. Introduced in 2017, it’s a levy paid by UK employers whenever they sponsor a skilled worker from outside the UK under a Skilled Worker or similar visa route. The charge was designed to encourage businesses to invest in training the domestic workforce rather than defaulting to overseas hiring — though opinions on how well it’s achieving that vary wildly. It’s calculated per worker, per year, and the costs can stack up fast. Whether you’re an HR manager at a large corporation or a small business owner trying to hire one specialist from abroad, this charge directly affects your budget. This guide breaks it all down — what it is, what it costs, who’s exempt, and what it actually means for you.
So, What Is the Immigration Skills Charge?
Let’s start simple. The Immigration Skills Charge (ISC) is a fee that UK employers must pay when they sponsor a migrant worker under certain visa categories — primarily the Skilled Worker visa and the Intra-company Transfer visa. It’s not a visa fee exactly. Think of it as a separate tax on top of the visa application process, paid entirely by the sponsoring employer, not the worker.
It came into effect on 6 April 2017, introduced under the Immigration Skills Charge Regulations 2017. The government’s reasoning? If businesses are going to hire talent from abroad, they should contribute to a pot that funds skills training for UK-based workers. The collected funds go to the Department for Education and the devolved administrations in Scotland, Wales, and Northern Ireland to support apprenticeships and workforce training programmes.
In theory, it nudges employers to think twice before skipping the local talent pipeline. In practice, for many industries facing genuine skills shortages — healthcare, tech, engineering — it’s just another cost of doing business.
Who Has to Pay It?
If you’re a UK employer with a Sponsor Licence and you’re hiring someone from outside the UK (or someone already in the UK on a different visa who needs to switch), you’re likely on the hook for the ISC.
Specifically, it applies when sponsoring workers under:
- Skilled Worker visa
- Global Business Mobility – Senior or Specialist Worker (formerly Intra-company Transfer)
- Global Business Mobility – Graduate Trainee
The charge is the employer’s responsibility. You cannot pass this cost onto the worker — doing so would breach your sponsor licence obligations, which is a big deal and could result in losing your licence altogether.
How Much Does It Actually Cost?
Here’s where it gets real. The ISC is calculated based on the size of your organisation and how long you’re sponsoring the worker for. It’s charged per year (or part thereof), so a 3-year visa means you pay for 3 years upfront at the point of the Certificate of Sponsorship (CoS) being assigned.
Current ISC Rates (as of 2024–2025)
| Organisation Type | Per Year Per Worker |
|---|---|
| Small or charitable sponsors | £364 |
| Medium or large sponsors | £1,000 |
How do you know if you’re small or large?
Under the Companies Act 2006 definition, you’re a small organisation if you meet at least two of the following:
- Annual turnover of no more than £10.2 million
- Balance sheet total of no more than £5.1 million
- No more than 50 employees
Charities registered with the Charity Commission also qualify for the lower rate.
A Quick Example
Say you’re a medium-sized tech company sponsoring a software engineer for 3 years. You’d pay:
£1,000 × 3 = £3,000 just in ISC. That’s before the visa application fee, the Immigration Health Surcharge, and any legal costs.
Now imagine you’re hiring a team of five specialists. That’s £15,000 in ISC alone. Yeah. It adds up.
When Is It Paid?
The ISC is paid at the point of assigning the Certificate of Sponsorship — that’s the digital record you create through the Sponsor Management System (SMS) that essentially gives the worker permission to apply for their visa.
It’s an upfront payment for the full duration of the visa being requested. So if you sponsor someone for the maximum five-year period under the Skilled Worker route, you’re paying five years’ worth of ISC in one go.
If the visa is later extended, you pay again for the extension period. If the worker leaves the job before the visa expires, you may be able to claim a partial refund — more on that below.
Are There Any Exemptions?
Good news: not everyone pays the ISC. There are several categories of workers and organisations that are exempt from the charge entirely.
Exempt worker categories include:
- Workers sponsored under the Intra-company Transfer (Established Staff) route who are coming for 12 months or less
- Workers on the T2 Minister of Religion route
- Workers on the International Agreement visa
- PhD-level occupations (SOC code-dependent — these are exempted from the charge)
- Workers sponsored under certain Government Authorised Exchange schemes
Exempt employer types include:
- UK charities (they qualify for reduced rates, as above)
- Government bodies in certain circumstances
It’s worth checking the specific Standard Occupational Classification (SOC) code for the role you’re filling, because PhD-level roles are exempt and that list is quite specific.
Can You Get a Refund?
Actually, yes — and this is something a lot of employers don’t know about.
If a sponsored worker leaves their job before their visa expires, the employer can apply for a refund of the ISC for the unused full years remaining. Note: it’s full years only, not partial years. So if someone leaves six months into their second year, you can only reclaim the ISC for any full years left after that point.
Refunds are processed through UKVI and can take several weeks, but they do happen. Always keep track of your workers’ employment status for exactly this reason.
What Happens If You Don’t Pay?
Short answer: UKVI won’t let you assign the Certificate of Sponsorship. The payment is part of the CoS assignment process in the Sponsor Management System — you literally cannot proceed without completing it. So there’s no sneaking past it.
And if you tried to offload the cost to your employee — nope, that’s a compliance breach. You could lose your sponsor licence, face civil penalties, and generally have a very bad time.
Why Does This Charge Exist? (The Bigger Picture)
Let’s zoom out for a second. The Immigration Skills Charge sits within a broader government ambition to reduce reliance on overseas labour and encourage employers to invest in training homegrown talent.
The money collected goes into the Apprenticeship Levy fund and supports training schemes managed by the devolved governments. The idea is that if hiring internationally costs more, employers will think harder about developing local talent first.
Critics — and there are many — argue the charge penalises industries like the NHS and social care that face genuine, acute shortages that no amount of domestic training can quickly fix. The tech sector raises similar concerns. Meanwhile, supporters say it creates a more level playing field and incentivises long-term workforce investment.
Whether it’s working? That’s a debate for economists. For you as an employer, it’s just a line item you need to budget for.
How the ISC Fits Into the Broader Cost of Sponsorship
The ISC is one piece of a larger puzzle. When you’re hiring from overseas, here’s a rough picture of what you’re actually paying:
| Cost | Who Pays |
|---|---|
| Sponsor Licence application (if new) | Employer |
| Certificate of Sponsorship fee (£239 per CoS) | Employer |
| Immigration Skills Charge | Employer |
| Skilled Worker visa application fee | Usually employee (or employer) |
| Immigration Health Surcharge | Usually employee (or employer) |
| Legal/immigration adviser fees | Usually employer |
That CoS fee of £239, by the way, was increased significantly in April 2024 from its previous level of £199. Fees in the immigration space tend to move upward over time, so always check the current UKVI fee schedule.
A Note for Small Businesses
If you’re running a small business and you’re considering sponsoring your first overseas hire, the ISC can feel like a genuine barrier. At £364 per year, it’s more manageable than the large employer rate, but when stacked with all the other costs, you could easily be looking at £2,000–£5,000+ in total employer-side costs before the person even starts.
The smartest approach? Treat sponsorship as an investment with a clear ROI in mind. If the role is genuinely hard to fill domestically — and many are — then the cost often justifies itself within months. But go in with eyes open.
FAQs: Your Burning Questions Answered
Q: Is the Immigration Skills Charge tax-deductible? A: Generally, yes — as a business expense it can typically be treated as a deductible cost. Always confirm with your accountant for your specific circumstances.
Q: Does the ISC apply to EU nationals post-Brexit? A: Yes. Since the end of the EU Settlement Scheme’s grace period, EU nationals (except Irish citizens) who don’t already have settled or pre-settled status in the UK need to go through the standard visa route like any other overseas national, and their sponsorship is subject to the ISC.
Q: What if the visa is refused? Do you get the ISC back? A: Yes — if the visa application is refused, the ISC is refunded by UKVI.
Q: Can the employer and employee share the ISC cost? A: No. Employers are legally prohibited from passing the ISC onto the sponsored worker, whether directly or indirectly.
Q: Is the ISC the same as the Immigration Health Surcharge? A: No, they’re completely separate. The Immigration Health Surcharge (IHS) gives the worker access to the NHS and is usually paid by the employee (or employer on their behalf). The ISC is a levy paid solely by the employer.
Q: Are there any plans to change the ISC rates? A: Rates have changed before — they were increased in April 2022 and again in April 2024. It’s always worth checking the current UKVI guidance for up-to-date figures before budgeting for sponsorship.
Q: Does the ISC apply to Global Business Mobility visa routes? A: It depends on the specific route and duration. The Senior or Specialist Worker and Graduate Trainee routes are subject to the ISC, while some other GBM routes have exemptions for shorter assignments.
Final Thoughts: The ISC in Plain English
The Immigration Skills Charge isn’t complicated once you strip away the jargon. It’s a fee employers pay to the government when they sponsor overseas talent. It exists to fund domestic skills training. It’s calculated per worker, per year, based on your organisation size. And it’s non-negotiable.
If you’re a UK employer navigating the sponsored worker process, the ISC is just one of the costs of accessing a global talent pool. The key is to plan for it, budget accurately, and ensure your HR or immigration team understands the rules around refunds and exemptions — because that’s where money can either be left on the table or quietly saved.
And if you’re an overseas worker wondering whether your employer paid it? They did. You’re worth it.
Sources:
- UK Visas and Immigration (UKVI) — Immigration Skills Charge guidance: www.gov.uk/immigration-skills-charge
- Home Office — Immigration Skills Charge Regulations 2017 (SI 2017/499)
- UK Visas and Immigration — Sponsor a Skilled Worker guidance: www.gov.uk/skilled-worker-visa/sponsor-a-skilled-worker
- Department for Education — Apprenticeship Levy and funding guidance: www.gov.uk/guidance/apprenticeship-levy
- Companies Act 2006 — Definition of small companies (Section 382)
- Home Office — Sponsor licence guidance for employers (current edition, updated 2024)
- UK Visas and Immigration fee schedule (updated April 2024): www.gov.uk/government/publications/visa-regulations-revised-table
