Over and above the complex visa applications and business immigration regulations you need to abide by, UK employers recruiting from overseas to fill job vacancies need to know about the immigration health surcharge (IHS) and the changes due to be introduced on 6 February 2024.
Here’s our guide for employers on the immigration health surcharge and how it works.
Jump to:
- What is the immigration health surcharge?
- Who must pay the immigration health surcharge?
- What are the current immigration health surcharge fees?
- How is the immigration health surcharge calculated?
- Increase in the immigration health surcharge fees
- Exceptions to paying the IHS
- Refunds and the immigration health surcharge
- Can an employer recoup payment of the immigration health surcharge?
What is the immigration health surcharge?
The Immigration Health Surcharge (IHS) is a fee individual visa applicants applying for certain UK visas or immigration status must pay as part of their visa application process. The IHS is a set fee designed to reflect the potential usage of the UK’s National Health Service (NHS) resources by individual visa holders whilst resident in the UK.
The IHS was introduced by the UK government in April 2015 under the powers contained in section 38 of the Immigration Act 2014. Income raised goes to general UK government funds and is then distributed to devolved health administrations.
The IHS fees have been periodically increased since 2015 and are due to increase again on 6 February 2024.
Who must pay the immigration health surcharge?
Most UK visa applicants must pay the IHS on top of their visa application fees. A visa applicant applying from outside of the UK for a visa or limited leave to enter for more than six months will need to pay the IHS unless they fall into one of a limited number of exceptions.
Visa applicants applying from within the UK must pay the IHS even if their visa application is for less than six months unless they fall within one of the exceptions. Payment of the IHS fee generates an IHS reference as proof that the IHS fees have been discharged. With this reference, the visa applicant can submit their online visa application.
Payment of the IHS is the responsibility of the individual visa applicant and not their sponsoring employer. Where a sponsoring employer provides private health insurance for their employees, a visa applicant is still required to pay the IHS in full.
In some sectors where it is particularly hard to recruit skilled workers or specialist staff, it is common practice for UK employers to offer a golden hello to include payment of the IHS on behalf of the employee. Business immigration solicitors caution about the timing of the payment and the need to ensure there is a suitable recoupment clause in the employment contract in case the overseas worker’s employment is terminated before the expiry of their visa.
What are the current immigration health surcharge fees?
The current IHS fees are £624 per visa applicant per year of leave granted. If a recruit is bringing a partner with them on a dependant visa the partner will also need to pay the IHS. Any dependent children requiring dependant visas will also incur an IHS fee. The IHS fee is currently reduced to £470 per year for children under the age of 18 and students.
How is the immigration health surcharge calculated?
The IHS is calculated for the duration of the requested visa and must be paid upfront. Annual or monthly payments are not permitted.
The Home Office will not apportion the amount of the IHS to the exact duration of the visa. The rules say a visa applicant must:
- Pay half of the yearly amount if the application includes part of a year that is less than six months and
- Pay for a whole year if the application includes part of a year that is more than six months
The IHS calculations can be confusing when a visa applicant is requesting a visa for say 16 months or 19 months duration. That’s why the government provides an online immigration health surcharge calculator that can be accessed here.
Increase in the immigration health surcharge fees
The IHS will be increased to £1,035 for adult applicants and to £776 for child/student applicants. The increases will come into effect on 6 February 2024.
The impact of the IHS increase means a work visa applicant will need to pay £3,105 for a 3-year visa. If a recruit is bringing their spouse and two children the IHS increases to £10,866 for a three year work visa and dependant visas.
To avoid recruits having to pay the increased IHS fees, UK employers are advised where practicable to ensure that job applicants receive their certificate of sponsorship in time to allow the visa applicant to submit work visa and dependant visa applications before the new IHS fees take effect in January 2024.
The increase in the IHS is making some UK employers consider offering IHS loans to employees as they recognise that many visa applicants may struggle to raise the funds for visa application fees, the IHS and travel expenses as upfront costs.
Exceptions to paying the IHS
Most visa applicants are required to pay the IHS and if they do not do so their visa application will be refused. The main exceptions to payment are:
- The visa application is for six months or less
- The applicant is applying for a Health and Care Worker Visa or is a dependant where the main visa applicant is applying for the Health and Care Worker Visa
- The applicant is applying for a Frontier Worker permit and has an S1 certificate
There are other exceptions that most employers will not come across. For example, diplomats, victims of human slavery, asylum seekers or visiting army personnel.
A key point for business owners is that if a job applicant has settled status under the EU Settlement Scheme or has indefinite leave to remain, they will not require a work visa and nor are they responsible for payment of the IHS. To assist with staff retention and reduced sponsorship costs, some employers provide legal support with late applications for settled status or with indefinite leave to remain applications.
Refunds and the immigration health surcharge
When a work visa applicant is expected to pay over £10,000 in IHS charges for three year visas for their family of four then naturally questions are asked about when the immigration health surcharge will be refunded by the Home Office.
If a visa application is refused by the Home Office the applicant will receive a full refund of the IHS. Refunds are processed automatically by the Home Office and are normally paid back into the account within six weeks. Where an applicant seeks an administrative review or appeal the IHS refund does not take place until the outcome of the administrative review or appeal.
If a visa is granted for a shorter duration than requested by the visa applicant the Home Office will process a partial refund.
IHS refunds are not available where a visa applicant:
- Decides not to take up a job offer in the UK
- Elects to leave the UK early
- Has their visa curtailed because they did not comply with visa conditions
- Requests a visa for a period requiring them to pay the IHS for longer than their planned stay in the UK. For example, if an applicant requires a work visa for 20 months, then under the immigration rules, they need to pay the IHS for two full years. The applicant will not get a four month refund when their visa application is processed or when they leave the UK
- Has not used the NHS during the duration of their stay in the UK
Can an employer recoup payment of the immigration health surcharge?
With the recruitment crisis in some sectors of the economy, UK employers are having to come up with golden hello packages to attract the brightest and best overseas talent to the UK. This is particularly the case in the digital and tech sectors where numerous employers are after the same specialist skills.
UK employers are naturally wary of expending large sums on prospective employees and want to know from their business immigration and employment law solicitors if they can claw back payment of individual visa application fees or the IHS from the employee and in what circumstances.
Sponsor licence holders cannot try to recoup general sponsor licence overheads, the costs of the certificate of sponsorship or the immigration skills charge from an employee. However, an employment contract can include a clawback provision to recoup all or part of an incentive or golden hello payment provided the clause in the contract is not considered onerous.
An example of an onerous term would be a requirement for a Skilled Worker Visa holder to repay their employer the full amount of the IHS charge if the employee left their employment after working for 20 months out of their 24-month work visa. The clawback provision might not be deemed onerous if it was apportioned to reflect the time spent by the sponsored employee in the employment of the company.
Taking advice from specialist business immigration and employment law solicitors can save employers money as experts can consider the practical and legal considerations of a business’s legitimate aim of welcoming an overseas employee on board whilst also wanting to protect the company from early departure for reasons outside the company’s control.
As business immigration lawyers, we have experienced most scenarios and can offer pragmatic legal advice. For example, if an overseas worker does not start their employment in the UK as they change their mind about moving to the UK or get a better job offer, on a practical basis a business may be unable to enforce the term in the employment contract that the recruit refunds the IHS fees.
Accordingly, it may be preferable for the business to say that they will reimburse the IHS fees paid by the sponsored employee once the recruit has completed their probationary period of employment and include a suitable clawback provision in the employment contract if the employee terminates their employment before the expiry of their visa.
