The Government’s quick solution to cutting migration – make it unaffordable

Hidden away in last week’s budget news was confirmation that the Immigration Health Surcharge will be increasing from October 2020.  This will pose a significant additional cost on employers and visa applicants and it should be noted that this cost will also apply to new arrivals from the EU from 1 January 2021.

Services
Immigration
Type
Updates

The new rate from October will be £624 per person, per year of their visa.  There will be a lower rate of £470 for children and students.  By way of example, in the case of a family of four applying for visas lasting five years, this comes to a total of £10,940 all payable in advance.  The total cost for the same family under the Tier 2 visa category, including visa fees and employers’ sponsorship charges could exceed £21,000 (not including extra costs to get a decision within a reasonable timescale).

The Immigration Health Surcharge (IHS) was introduced by the coalition government in 2015 as a levy on visa applicants coming to the UK for over six months and enabled them to use the NHS during the course of their visa.  It’s important to note that this charge has never been directed at so called “medical/health tourists”.  New rules for visitors coming to the UK for under six months were introduced at the same time, dramatically increasing the cost of treatments that visitors needed to pay to use the NHS.  People who now pay the IHS, on the other hand, were already paying for this through the exact same income taxes, National Insurance and council tax as other residents in the UK.  The IHS was therefore an additional charge on top of the contributions migrants were already making to the economy generally and the NHS specifically, beyond those contributed by other tax payers. 

It was originally set at £200 per year, or £150 per year for students.  From January 2019 the amounts were increased to £400 per year, or £300 per year for students and Youth Mobility visas. The Conservative manifesto in the 2019 General Election committed to raising the IHS “to ensure it covers the full cost of use.”  Despite the Government confirming in October 2019 that this was only £480 and migrants are already funding by the NHS by paying taxes on top of their IHS payments, the IHS is now to be increased further.  The House of Commons briefing paper on the IHS last month acknowledged the above points but doesn’t seem to have any clear idea of how the new level of the surcharge is calculated.  This continues the general policy of charging more for many visas than it actually costs to process them, generating profits for UKVI.

The impact of the rising IHS is likely to be significant.  It represents a huge cost for a family to outlay before even moving to the UK and is likely to drive down visa numbers, especially considering from next year it will apply to new arrivals from the EU and EEA who have never needed to pay for a UK work visa, let alone the IHS.  On the one hand this will help deliver the Government’s promise to reduce net migration by simple expedient of making visas unaffordable but it is also likely to have a massive effect on the availability of workers in the UK, just at the time that the Government introduces its new Points-Based System amid expectations of significant labour shortages in critical areas.

One area still to watch is what will happen with NHS visas in the future.  The Government has talked about special arrangements for NHS employees, perhaps refunding the IHS over the course of their employment, but details are yet to be announced.

If you think these changes might affect you, then don’t hesitate to get in touch with our Immigration team for advice.


This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.

All content on this page is correct as of March 16, 2020.