Another payroll levy to start on 6 April – are you affected?
As part of the Government’s plans announced in last year’s budget to reduce the country’s reliance on migrant workers and incentivise the training of British workers, there is a further payroll levy starting on 6 April.
This is the immigration skills charge or ISC and affects those Employers who recruit non-EEA Tier 2 skilled migrants. It works by charging an annual levy per employee of £1,000, known as a Certificate of Sponsorship. This is reduced to £364 for Employers (sponsors) who are defined as small, with an annual turnover of £10.2m or less and 50 employees or fewer, as well as charitable organisations.
The ISC is payable up front when the Certificate of Sponsorship is assigned to an employee on or after 6 April 2017. This could amount to as much as £5,000 as the Certificate of Sponsorship can be assigned for a maximum five-year stay. The charge does not apply to tier 2 migrants who were in the UK before the 6 April 2017 who then extend their stay or change jobs.
The salary threshold for Tier 2 employees also rises to £30,000 for new applications from 6 April 2017, meaning that this is the minimum salary that can be offered. There is a full exemption from the charge for PhD students swapping from Tier 4(Student visa) to Tier 2 (Working visa) once their studies have been completed, and also for intra-company transfer graduate trainees. This is designed to help retain talented workers and students who could help the British economy grow.
Additionally, if employers also choose to fund the immigration health surcharge, which can be as much as £200 per year, the cost of bringing non-EEA skilled workers to the UK can begin to mount up. Given that an Employer has to apply and pay for a Sponsor License before they can operate the levy and that similarly, the Tier 2 employee also has to complete and pay for an application then this is another layer of administration that Employers need to be familiar with.