This week Jessica Clough, Chartered Executive in the employment law and Immigration team at Boyes Turner, looks at what changes we expect to the Immigration system in early 2024.

1. Increases to the Immigration Healthcare Surcharge

From 16 January 2024, the Immigration Healthcare Surcharge (IHS) will be increasing as follows:

a. From £624/year/person to £1,035/year per person for adults.

b. From £470/year/person to £776/year/person for under 18 year olds.

While this increase has been known about since July 2023, the timing of it coming into force was only been announced earlier this month.

As IHS fees are payable on the full visa period at the point of submitting a visa application, this represents a significant increase to the up-front fees sponsors will have to pay when sponsoring a worker. For example, the increase in IHS fees for a standard 5 year Skilled Worker will be £2,055.

While it is possible for sponsors to pass this cost on to the sponsored worker in various ways (for example, through use of repayment clauses or employee loans), it is a financial disincentive to hiring staff from abroad. With increasing migration rates in the news, and ahead of next year’s election, reducing use of sponsored workers would seem to be the government’s primary intentions behind this fee rise. It’s also worth remembering that increasing the IHS was a Conservative manifesto pledge at the last election, so this has been in the pipeline for quite some time.

2. Increases to the minimum salary thresholds

In his November 2023 Budget announcement, the Chancellor revealed that National Minimum Wage (NMW) hourly rates will be increasing from 1 April 2024 as follows:

a. £11.44/hour for those 21 years and above.

b. £8.60/hour for 18-20 year olds; and

c. £6.40 for apprentices and 16-17 year olds.

The current minimum salary thresholds for skilled workers are based on a minimum salary of

a. £26,200/year; or the “going rate” for that role, whichever is higher; and

b. £10.75/ hour.

c. Or £20,960/year and £10.75/hour for those in shortage occupations / with tradeable points.

As NMW will be rising above £10.75/hour, it is expected the Government will need to update the Skilled Worker minimum salary thresholds in April 2024 as well to avoid local workers being undercut.

However, even if the government does not increase the salary thresholds immediately on 1 April 2023, Sponsors should be aware of their duty to comply with all UK laws. This includes complying with NMW Regulations, so be sure to check the salaries of any sponsored workers will remain compliant with NMW Rates after 1 April 2024 and, if necessary, increase their salaries to ensure this is the case.

What actions can Sponsors take?

1. Make sure any relevant stakeholders in the business are aware of the coming changes in good time.
2. Visa fees are complicated and there are many misconceptions about what fees apply in different scenarios, so it may be beneficial to seek advice from an Immigration Advisor early in the planning process to ensure your recruitment strategy is based on facts not errors.
3. Plan your recruitment over the next 6 months to prioritise use of the lower application fees while they are available. Visa applications may take a few weeks to prepare before they are ready to submit (depending on the documentation to be obtained), so if you want to beat the IHS increase in January 2024, start preparation of any applications as early as possible in December 2023.
4. Think strategically about your use of the Immigration system. The starting point for recruitment should always the UK talent pool. If there is a shortage of a particular skill set in the UK then the immigration system can be very useful, but should not be the default and ideally should be considered alongside other strategies, such as providing training opportunities and upskilling your existing workforce.
5. Consider ways to spread the cost of the visa application. Possible options include:

a. Rather than a 5 year visa, offering an initial 3 year visa, followed by a 2 year visa. While slightly more expensive in the long term (as you will have two visa fees to pay), it allows the cost to be spread across the 5 year period rather than incurring it all at the start.

b. Sharing the cost with the employee via use of repayment clauses, clawback clauses (in the event they leave before the end of their visa period), or employee loans. However, these should not be used to reduce their monthly salary below the Skilled Worker minimum salary thresholds, so may not be appropriate in all situations.