Immigration Skills Charge: A Complete Guide for UK Employers
The Immigration Skills Charge adds significant costs to sponsoring overseas workers. This guide explains who pays, how much it costs, how to calculate it, and which roles are exempt.
Update — 29 August 2026: This guide has been checked against the current Home Office rules. The ISC remains £480 for the first 12 months for a small or charitable sponsor and £1,320 for a medium or large sponsor. The exemption and payment sections below have also been corrected. Use our Fee Calculator for a full cost breakdown.
Immigration Skills Charge: A Complete Guide for UK Employers
When UK employers hire overseas workers through the Skilled Worker route, the cost isn’t just the application fee. The Immigration Skills Charge (ISC) — sometimes called the skills levy — can add thousands of pounds to the cost of each sponsorship. Yet many employers are caught off guard by it, or don’t fully understand how it’s calculated.
This guide covers everything employers need to know about the ISC: what it is, who pays, how to calculate it, and how to plan for it.
What is the Immigration Skills Charge?
The Immigration Skills Charge is a fee paid by UK employers when they sponsor overseas workers under certain visa routes. It was introduced in April 2017 as part of a government initiative to incentivise domestic skills investment and reduce reliance on overseas labour.
Revenue from the ISC goes into a fund used to develop skills and training in the UK workforce — hence the name.
Important: The ISC is paid by the employer, not the worker. It is unlawful for employers to pass this cost on to the sponsored employee, either directly or by deducting it from their salary.
Who Pays the Immigration Skills Charge?
The employer pays the ISC when assigning the Certificate of Sponsorship (CoS), not when the worker pays for their visa application. The full charge for the period on the CoS is paid upfront.
Employers must budget for this cost when planning to hire overseas workers. It is payable for each sponsored worker, for each year of their visa.
Current Rates (from December 2025)
The ISC was increased significantly in December 2025. The current rates are:
| Organisation Type | First 12 months | Each additional 6 months |
|---|---|---|
| Small or charitable sponsor | £480 | £240 |
| Medium or large sponsor | £1,320 | £660 |
How to Determine Your Organisation Size
You’re classified as a small or charitable sponsor if you meet at least two of these three criteria:
- Annual turnover of £15 million or less
- Total assets worth £7.5 million or less
- 50 or fewer employees
If you meet fewer than two criteria, you’re classified as medium or large.
How to Calculate the ISC
The ISC is calculated from the employment start and end dates on the CoS. For an in-country application, any period up to 12 months attracts the full first-year charge. For an application from outside the UK, there is no ISC if the period is less than 6 months; otherwise the first-year charge applies. Time after the first year is charged in 6-month blocks.
Formula
- First 12 months: First-year rate applies
- Each additional 6 months or part-period: Half-year rate applies
Practical Examples
Example 1: Large employer, 3-year sponsorship
- Year 1: £1,320
- Additional 2 years = 4 × 6-month periods = 4 × £660 = £2,640
- Total: £3,960
Example 2: Small employer, 5-year sponsorship
- Year 1: £480
- Additional 4 years = 8 × 6-month periods = 8 × £240 = £1,920
- Total: £2,400
Example 3: Large employer, 18-month sponsorship (1 year + 1 × 6 months)
- Year 1: £1,320
- 1 × 6 months: £660
- Total: £1,980
The dates on the CoS drive the calculation, so check them before assignment.
What About Extensions?
When sponsorship is extended, the employer pays for the additional period. A new CoS for an internal job change does not create an extra ISC charge if it does not extend the time already covered.
When You Do Not Need to Pay the ISC
The charge applies to Skilled Worker and Global Business Mobility Senior or Specialist Worker sponsorship. It is not a general charge on every sponsored work route.
Within those two routes, the main current exemptions are:
- Jobs in occupation codes 2111, 2112, 2113, 2114, 2115, 2119, 2161, 2162 and 2311 — specified science, research and higher-education roles
- A worker who currently has Student, Child Student, Tier 4 or Short-term Student permission, including a later CoS to continue in the same role where the exemption applied initially
- An overseas application where the sponsored period is less than 6 months
- A narrow Senior or Specialist Worker exemption for qualifying EU nationals temporarily transferred from an EU business for no more than 36 months
- Limited transitional cases where the CoS was assigned before 6 April 2017
A Health and Care Worker visa is not automatically exempt from the ISC. Some health and research jobs qualify because their occupation code appears in the exempt list, but the visa label itself is not enough. Switching from a Graduate visa is not a blanket exemption either. Check the worker’s route, previous permission and occupation code before budgeting.
The ISC in Context: Total Cost of Sponsorship
To budget accurately, employers should account for all sponsorship-related costs:
| Cost Item | Amount |
|---|---|
| Sponsor licence application (large) | £1,682 (one-off) |
| Sponsor licence application (small) | £611 (one-off) |
| Certificate of Sponsorship fee | £525 per worker |
| Immigration Skills Charge (large, 3-year) | £3,960 per worker |
| Immigration Skills Charge (small, 3-year) | £1,440 per worker |
| Priority processing (sponsor licence) | £750 (optional) |
Total example cost for a large employer sponsoring one worker for 3 years:
- CoS fee: £525
- ISC: £3,960
- Direct sponsorship costs: £4,485
(Visa application fee of £819–£1,618 is paid by the worker (outside UK rates, from April 2026), though some employers reimburse it as part of a package.)
Can Employers Recoup ISC Costs?
Legally, no. Employers cannot:
- Deduct ISC from the worker’s salary
- Ask workers to repay it if they leave early
- Include it in a repayment clause in the employment contract
Doing so is a breach of the sponsorship rules and can result in compliance action against the sponsor licence.
However, there is no prohibition on employers factoring sponsorship costs into their overall total cost of employment calculations when deciding salary packages or recruitment budgets. The restriction is specifically on passing the cost directly to the individual worker.
Planning for the ISC in Your Recruitment Budget
Given the significant cost, here’s how to incorporate ISC into HR and recruitment planning:
Annual Budget Allocation
Calculate expected ISC costs for the year based on:
- Current sponsored headcount and renewal dates
- Planned new hires requiring sponsorship
- Expected visa durations
Cost Per Hire Analysis
Include ISC in your total cost-per-hire calculation for roles requiring sponsorship. This ensures realistic comparison with domestic candidates and helps justify sponsorship costs to finance teams.
Cash Flow Timing
The ISC is paid in full when the CoS is assigned. Build that upfront payment into cash flow forecasts, particularly for large cohorts.
Check Exemptions Worker by Worker
Do not assume a whole sector or visa label is exempt. Check the occupation code, the worker’s current permission and, for a Senior or Specialist Worker, whether the narrow EU transfer exemption applies.
Recent Changes to the ISC
The Immigration Skills Charge has increased substantially since it was introduced:
| Year | Large Sponsor (Year 1) | Small Sponsor (Year 1) |
|---|---|---|
| 2017 | £1,000 | £364 |
| 2024 | £1,000 | £364 |
| December 2025 | £1,320 | £480 |
The December 2025 increase of 32% was part of a broader set of immigration fee increases announced by the government. These increases have sparked criticism from employer groups, particularly in sectors relying heavily on international recruitment.
ISC and the Immigration Health Surcharge: Don’t Confuse Them
The Immigration Skills Charge is often confused with the Immigration Health Surcharge (IHS), but they are separate payments:
| Immigration Skills Charge | Immigration Health Surcharge | |
|---|---|---|
| Paid by | Employer | Worker (usually) |
| When paid | When the sponsor assigns the CoS | When the worker applies for a visa |
| Purpose | Skills investment fund | NHS funding |
| Rate (2026) | Up to £1,320 per year | £1,035 per year |
| Health and Care treatment | No route-wide exemption; some occupation codes qualify | Health and Care Worker applicants and their dependants are exempt |
They are separate payments made at different stages. The sponsor handles the ISC through the sponsorship process; the applicant handles any IHS during the visa application.
Reporting and Records
Employers don’t receive specific confirmation receipts for ISC separately from the general CoS assignment process. Records of ISC payments should be maintained as part of your sponsorship compliance record-keeping.
HMRC does allow the ISC to be treated as a deductible business expense for Corporation Tax purposes, though employers should confirm the current HMRC guidance and their specific circumstances with a tax adviser.
Conclusion
The Immigration Skills Charge is a significant but often underestimated cost of UK work visa sponsorship. For medium and large employers, it can easily add £4,000–£6,000 or more to the cost of sponsoring a single worker for a standard 3-to-5-year visa.
Understanding the charge — who pays it, when, how to calculate it, and how to plan for it — is essential for any employer with an active sponsorship programme.
Looking to understand the full cost picture? Our employer guides cover every aspect of UK visa sponsorship, from applying for a licence to maintaining compliance.
