Cost of business visas is soaring. We need a rethink

Jonathan Beech, Managing Director, Migrate UK explores the effect of the rising costs for overseas workers
Jonathan Beech
UK passport and visa

Just last October, the Home Office increased fees between 15% and 35% for standard visas to visit, live, study and work in the UK for overseas workers. Businesses are also expecting a further blow with a 66% increase in the compulsory Healthcare Surcharge for legal migrants on February 6.

I am the managing director of Migrate UK, a legal specialist in business immigration.

We’re hearing from our clients in sectors such as engineering, tech and finance that this double whammy in costs for legal immigration is forcing some existing overseas employees already in the UK to look for future employment outside the country. While one scientific research client has already confirmed that these latest fee increases have resulted in them paying for US visas for employees instead (known as the Green card), so employees can work remotely from the US, as opposed to paying for ever-increasing UK immigration fees. 

The Treasury doesn’t seem to have realised that if many other UK employers follow the Green Card route for overseas employees it could miss out on tax revenue of up to £100m per annum. For example, if just 10,000 UK employers choose this same path, for workers paying £10k in tax per employee (a modest tax example which could be far larger in many cases), could easily equal over £100m of lost tax revenue.

Other UK employers working with us are also now reverting to one-year sponsorship routes instead of three, due to the large upfront costs needed for three years of sponsorship. Businesses in shortage sectors have to contemplate covering these fees, or arranging loan payments for employees to cover the higher costs - a dangerous game to play should the employee fail to arrive in the UK for work, as not all these fees are refunded.

For example, a potential overseas employee can expect to pay £13,742 for their family of four to move to the UK for a three-year sponsored work contract including home office fees and NHS Surcharges from 6 February 2024. These employee fee payments are not spread over the term of the contract, but have to be paid upfront, while employers will also have costs on top.  The 66% increase in the health surcharge will be unworkable for most, as many migrant workers often reside in a country where wages and savings are not comparable to the UK.

Also, with a new increase in the minimum salary required for those arriving on the Skilled Worker visa from £26,200 to £38,700 from 4 April 2024, some employers may be faced with a 50% increase in salary requirements for new overseas recruits. Despite some media reports describing a softening in recruitment demand in 2024, this is not the case amongst our clients in healthcare, horseracing and construction for example who are struggling to recruit sufficient staff.

Some may say this is the price to pay for hiring from overseas, but many of these businesses face closure or restricted growth without the necessary skills. Many employers have tried to recruit for roles domestically for over nine months in many cases, but find both hiring and retention of employees extremely difficult.

Recruitment across these sectors will only get worse when the current 20% salary discount in shortage occupations is expected to end on 11 March 2024. As well as an expected shift in what occupations are likely to remain applicable, the list will become the ‘Immigration Salary List’ instead of the ‘Shortage Occupation List’.

What UK employers need from the government is a properly thought-out and stable immigration policy to support their skills shortages. Not knee-jerk policies that result in rushed announcements without adequate pre-consultation with sectors to assess their viability and impact, then ‘new rules’ hastily amended. For example, this was seen recently when it was announced that the minimum salary needed for a settled person to bring family members would rise from £18,600 to £38,700. This change was rapidly reduced to £29,000 to climb incrementally, effective from 11 April 2024, when it became clear the impact of such an increase would become disastrous for the recruitment of key workers.

Above-inflation increases in visa or health surcharge costs and the requirement to pay these upfront by overseas workers on average wages is draining the already shallow overseas talent pool and simply becoming unaffordable, while recruitment of UK employees to these jobs remains just a fraction of what’s needed.

Many businesses are already feeling the strain this year trying to secure overseas talent, with smaller businesses in particular simply not able to afford the visa costs, or to meet the salary threshold to assist a migrant worker to come to the UK. While another big factor in requiring further overseas talent is our ongoing ageing population, also voiced by feedback from our clients. Within the construction sector for example there is a large population aged 55 and above who are retiring with insufficient home grown labour to fill vacancies.

If we don’t halt these most damaging aspects of immigration policy we will not only see businesses closing, people being uncared for and the economy juddering to a snail's pace, but also lose out on workers and tax revenue to Europe and the US. We need to ensure the UK has the talent it needs to grow and thrive, especially in the fields where we already have amazing skills and global innovation such as life sciences and engineering.

Written by
Jonathan Beech
Written by
February 7, 2024