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New Skills Surcharge for Non-EU Workers Explained

September 7, 2017 Skills Surcharge

As of April 2017, the government imposed a new levy on employers wanting to bring in skilled workers from outside the European Economic Area (EEA).

The surcharge applies to foreign workers classified under Tier 2 visa rules. Tier 2 regulations control the admittance of skilled migrant workers into the UK. In order to gain a Tier 2 work visa, applicants must already have a firm offer of employment from a company in possession of a Tier 2 sponsor licence.

Without a sponsor licence, UK firms are not allowed to employ foreign nationals.

The main change introduced to Tier 2 regulations in April was that firms looking to sponsor an overseas national from outside the EEA must now pay a £1,000 levy to do so. The levy is payable per successful application, i.e. for every migrant worker you employ, and covers a period of 12 months. It must be paid again for every subsequent six months you employ the same worker, at a rate of £500 per six months, up to a maximum of five years.

Known as the ‘immigration skills charge’, this new levy applies to every Tier 2 application to work in the UK for six months or more. It applies to intra-company transfers as well as to general applications, and must be paid up front as part of the application process. If you employ a worker for more than six months but less than a year, the full initial levy must still be paid. The money is refunded if the worker is either refused a visa, or they end up working for another company.

There are a number of exceptions to the terms of the new Tier 2 skills charge as follows:

  • For SMEs and charities, the annual levy is reduced to £364, and £182 per six months after the initial 12 month period elapses.
  • No levy is charged for holders of a Tier 4 student visa switching to a Tier 2 work visa.
  • Intra company transfers for graduate trainees are exempt.
  • Any worker doing a job with a PhD equivalent standard occupational classification code is also exempt.

Other changes

In addition to the immigration skills charge being introduced, the revised Tier 2 rules also introduced the following changes:

  • The minimum salary threshold for general Tier 2 applications has been increased to £30,000. Tier 2 visas will no longer be granted for any occupations with a salary under £30,000.
  • By contrast, the salary threshold for graduate Tier 2 applications has been reduced to £23,000, and graduate applications will be prioritised in the government’s monthly visa quota system. The maximum number of overseas graduates a company can employ has been increased from five to 20.
  • The Tier 2 ‘Skills Transfer’ sub-category has been closed. This was a visa system for companies looking to bring workers in from overseas for periods of less than six months for skills development purposes.