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.
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 ISC is paid by the employer (sponsor) when the worker submits their visa application. It’s collected by UKVI alongside the visa application fee.
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 £10.2 million or less
- Total assets of £5.1 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 based on the length of the visa being requested, not the duration of employment.
Formula
ISC = (Number of full years + half-year rate for any remainder over 6 months) × annual rate
Wait — the actual calculation is slightly more granular:
- First 12 months: First-year rate applies
- Each additional 6 months: Half-rate applies
Practical Examples
Example 1: Large employer, 3-year visa
- Year 1: £1,320
- Additional 2 years = 4 × 6-month periods = 4 × £660 = £2,640
- Total: £3,960
Example 2: Small employer, 5-year visa
- Year 1: £480
- Additional 4 years = 8 × 6-month periods = 8 × £240 = £1,920
- Total: £2,400
Example 3: Large employer, 18-month visa (1 year + 1 × 6 months)
- Year 1: £1,320
- 1 × 6 months: £660
- Total: £1,980
Note that the ISC calculation uses the requested visa duration, not the actual employment period.
What About Extensions?
When an employer extends a sponsored worker’s visa, the ISC is paid again for the extension period, calculated in the same way. There’s no discount for continuing sponsors — each CoS triggers a new ISC payment.
Which Roles Are Exempt from the Immigration Skills Charge?
Not all sponsored workers attract the ISC. The following roles are exempt:
Exempt Visa Routes
- Health and Care Worker visa (all roles — a significant saving for healthcare employers)
- Global Business Mobility routes (Senior or Specialist Worker, Graduate Trainee, UK Expansion Worker, Service Supplier, Secondment Worker)
- Government Authorised Exchange
- International Agreement
- Charity Worker (Temporary Worker route)
- Religious Worker (Temporary Worker route)
- Creative Worker (Temporary Worker route)
Exempt Workers
- Workers who hold a Student visa and are switching to Skilled Worker
- Workers who hold a Graduate visa and are switching to Skilled Worker
- Workers who were sponsored under a Tier 2 or Tier 5 route before 2021 and are extending under transitional arrangements
Note: PhD-level occupations are not automatically exempt from the ISC (despite what some sources suggest). The exemption for PhD roles that existed in the old Tier 2 system was removed in 2021.
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) | £1,579 (one-off) |
| Sponsor licence application (small) | £574 (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) | £1,680 per worker |
| Priority processing (sponsor licence) | £500 (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 £719–£1,420 is paid by the worker, 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 when the worker submits their visa application (not when the CoS is assigned). Build this into cash flow forecasts, particularly for large cohorts.
Review Job Eligibility for Healthcare Route
If your organisation employs healthcare workers, and they qualify for the Health and Care Worker visa, ensure they’re being sponsored on the correct route. Accidentally using the standard Skilled Worker route means paying ISC unnecessarily.
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 worker applies for visa | When worker applies for visa |
| Purpose | Skills investment fund | NHS funding |
| Rate (2026) | Up to £1,320 per year | £1,035 per year |
| Healthcare exemption | Health and Care Worker route | Health and Care Worker route |
Both are collected by UKVI at the visa application stage, which can make the total payment confusing. The worker sees the combined total when paying online, which can run to several thousand pounds.
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.