Controversial Immigration Health Surcharge Fee Increase and Budgetary Concerns

Published on: 16/11/2023


Not long after the recent increases to UK visa and sponsorship fees in October 2023, again there will be another significant increase, this time with the Immigration Health Surcharge (‘IHS’), scheduled to take effect from 16 January 2024, pending Parliament approval.

The proposed increase to the IHS has raised concerns, especially among businesses who financially support their sponsored workers’ visa applications and are already feeling the strain due to rising costs caused by inflation.

What is the IHS?

The Immigration Health Surcharge, which funds access to the NHS for migrants, is required for most UK visa applications, payable alongside the visa application fees.

Individuals who typically qualify for an exemption from IHS payment include visitors to the UK, applicants under the EU Settlement Scheme, and those who have applied under the Health and Care provisions. The Home Office has confirmed that NHS staff and their dependants will continue to be exempt from the IHS. The IHS has remained unchanged since October 2020, and the Home Office attributes the proposed increases to the rising cost of healthcare provision and the additional pressures on the NHS resulting from population growth driven by migration.

For adult applicants, the annual IHS fee will increase to £1,035 per year, marking a 66% increase from the current £624 per year. Similarly, children and student applicants, along with their dependents, will witness a 65% increase, bringing the annual fee to £776 per person per year, up from the current £470.

Budget Revisions for Businesses

These significant fee hikes necessitate a re-evaluation of budgets and application strategies for businesses using or intending to use the UK immigration/sponsorship system. The sudden increase places an added burden on companies seeking to employ foreign nationals, prompting a need for careful financial planning and potential adjustments in workforce mobility plans.

In response to the fee escalation, businesses may explore the possibility of facilitating in-house employee transfers to different roles or increase migrant recruitment before the increase to capitalise on the current IHS rates. By taking proactive measures, companies may mitigate the financial impact of the fee hike and navigate the evolving immigration landscape more effectively

Government Strategy and Public Sector Strikes

The IHS fee increase is part of a broader government strategy. Amid persistent strikes by public sector workers, the UK government, in mid-2023, granted key public sector workers a wage increase averaging 6.5% for the year 2023/24. The IHS surcharge, coupled with other proposals and visa fee increases, is positioned as a means to cover the costs associated with this pay rise.

Having received approval from UK Parliament, the IHS fee increase is expected to take effect on 16 January 2024.

The controversial Immigration Health Surcharge fee increase introduces a new dynamic to the UK immigration system, prompting businesses and individuals alike to reassess their financial strategies and immigration plans. As the effective date draws near, companies must stay informed and adapt to the evolving regulatory environment to navigate the challenges posed by these substantial fee hikes.


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