Tag: Tier 2

UK immigration – All possible changes to Tier 2 visa

The Immigration Bill 2015/16 is currently making its way through parliament and is likely to be in force very soon.The Home Office wants to make it harder for an illegal worker to live and work in the UK. The vast majority of employers will have to be even more vigilant in establishing procedures that prevent employment of illegal workers, particularly in those sectors with a high employee turnover such as retail and hospitality.

In addition to the current £20,000 per illegal worker civil penalty, it will be a criminal offence to hire someone who an employer knows or has reasonable cause to believe is an illegal worker, with an increase in the maximum custodial sentence on indictment from two to five years for the employer.

We have had a relatively stable couple of years in terms of Tier 2 and given the ongoing focus on migration, not least the Brexit debate, it was perhaps inevitable that we would see the MAC recommend some deep cutting changes.  For employers in the IT sector new route will require a full review of resourcing and cost modelling.  For all employers the impact on the cost of Tier 2 will require a close look at necessity the cost benefit analysis – this is exactly the Government’s objective of course. UK employers who are sponsors under Tier 2 will be giving careful thought at the moment to their request for the new year’s (April 2016 – March 2017) allocation of certificates of sponsorship and looking at next year’s budgets.  When assessing this need sponsors should consider:-

  • are there any sponsored workers who will need to extend their leave in the UK under Tier 2 in this period?
  •  what international assignments to the UK are under consideration?
  • where are the current recruitment hot spots and do they bring any challenges in relation to availability of skilled candidates?
  • in light of this need what costs are associated with Tier 2 support for the next financial year?

 In the Summer of 2015 the Government requested that the Migration Advisory Committee (MAC) advise on a number of potential changes to Tier 2 of the points based system to address concerns about the rising number of migrants in that route and reliance on them to fill shortages. The MAC consulted in the Autumn and have recommended a wide range of changes including:

  • a new charge on employers who recruit from outside the EEA, likely to be at least £1000 per year for each non-EEA worker employed;
  • an increase in the minimum amount that a non-EEA worker must be paid in order to qualify as a skilled worker under the immigration rules to at least £30,000 in most cases;
  • tighter control on the ability of multi-national companies to transfer non-EEA personnel to the UK.

The recommendations are with the Government and although nothing is certain we expect many, if not all to be implemented, probably in April and October of 2016.

New Immigration Skills Charge and extension of International Health Surcharge

The MAC has endorsed the Government’s proposal that businesses recruiting from outside the EEA should pay an ‘Immigration Skills Charge’ to discourage reliance on migrant workers and encourage investment in training and up-skilling for UK workers. Only Tier 2 Graduate Trainee and Skills Transfer would be exempt from this charge. The amount of the charge will be for the Government to decide upon. The MAC suggests an appropriate amount would be £1,000 per year of the visa applied for. So the charge due on a 3-year visa would be £3,000 and on a 5-year visa £5,000.

New legislation will be needed to bring the charge into effect. The first step in that direction has already been taken, with the Immigration Bill being currently going through the Parliamentary process. It will be some time before that process is complete, meaning the skills charge is unlikely to take effect before October 2017. In addition there is the recommendation that the current exemption of intra-company transfer from the International Health Surcharge should cease.  If this recommendation is adopted it will not matter that the employer meets health charges through private provision. These changes will not limit or prevent the use of Tier 2 directly of course but will most certainly have an impact on the bottom line.  Taking into account annual visa fees increases the direct cost of a 3 year Tier 2 (General) hire with three dependants will increase from £5,023 to £8,023;   under Tier 2 ICT, the current cost would be only £2,623  but would also rise to the same amount.  .

Higher salary thresholds

Under the current rules, all Tier 2 (General) employees must be employed in a job with an annual salary of at least £20,800. In addition there are minimum salary requirements for specific occupations: where an occupation-specific threshold is higher than £20,800, the migrant must have a job at that higher rate (either new starter or experienced rates as applicable) to qualify for a visa.

The MAC has recommended that the overall threshold be raised to better reflect the higher qualifications that migrants now need in order to apply under this route. It recommends that it should be set at £30,000, with a lower threshold of £23,000 applying to those classed as ‘new entrants’. The MAC’s view is that there should, however, be no change to the basis on which occupation-specific thresholds are set rejecting the idea of a region assessment. The MAC recommends that the £30,000 threshold should also apply in the Tier 2 (Intra-company Transfer) route to short-term staff and skills transfers, where the lower threshold currently stands at £24,800. For graduate trainees in the Tier 2 (Intra-company Transfer) route, the MAC recommends aligning the salary threshold with that applicable to new entrants in the Tier 2 (General) route. If the rates recommended by the MAC are adopted by the Government that would mean a reduction in the salary threshold from £24,800 to £23,000.

Further controls on intra-company transfers

The MAC has recommended a number of other steps to ensure the Tier 2 (Intra-company Transfer) route is being used for its intended purpose. These include:

  • Extending the qualifying period with the company overseas for intra-company transfers from 12 months to 2 years for both short-term and long-term transferees (with no change to the existing requirement of 6 months for the graduate trainee route).
  • Requiring employers to set out why they need to bring the individual into the UK and what exactly they will be doing in the UK.
  • Creating a separate route, with a salary threshold of £41,500, for transferees used to carry out work for a third-party organisation. This change will primarily affect IT services companies who send  skilled employees to the UK to deliver contract to customers.
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New immigration and nationality fees for 2016 to 2017

Yesterday, on January 11th, the government set out their new proposed adjusted fees for visas, immigration and nationality applications and correlated premium services for 2016/2017. The fee changes will apply after further legislation is laid in Parliament by April this year.

The new legislation will set maximum levels on the amounts for broad categories of fees that can be charged by the Home Office over the next 4 years. The government made clear that there are no current plans to raise fees to the maximum levels.

Intent for these new changes is that by 2019/2020 border, immigration and citizenship system is self-funded by those who use it and that we slowly reduce taxpayers contributions to the system.

Fees for all sponsorship categories will stay at the current rates.

The main changes are:

  • small increases (2%) for visit, study and work visas
  • fees for settlement, residence and nationality will increase by 25% in 2016–17
  • targeted increases have been applied to premium services, such as the priority visa service

If you would like to know more about the new fees for applications, they can be found in the fees table.



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Non-EU financial service sector workers required

According to SJD Accountancy, the UK financial services sector needs more non-EU workers due to a worsening skills shortage. The increase in demand has occurred at a time when recruiters across the financial services sector are experiencing greater difficulties in obtaining Tier 2 visas. The Tier 2 visa cap of 20,700 means that there are not enough Restricted Tier 2 (General) Certificates of Sponsorship (COS) available to meet demand.

Tier 2 Visas Shortage

SJD Accountancy’s Chief Executive Officer, Simon Curry said: “June and July 2015 saw the Tier 2 Certificates of Sponsorship cap hit for the first time. This left many job roles across the financial services sector vacant last summer.”

Over the last 12 months applications for Tier 2 Visas in the financial services sector increased to 6,843, up from 6,270 in the previous 12 months representing a rise of 9.1 per cent. This represents the highest demand for Tier 2 visas to employ people in the financial services sector since the global recession of 2007.

Simon Curry said: “The increase of Tier 2 Visa applications shows that the financial services sector is recovering strongly, but it’s not guaranteed those applications will be granted due to the hoops non-EU workers and employers are made to jump through. This leaves the industry sector starved of the essential skills it needs.”

Increasing skills shortages in Financial Services Sector

According to SJD Accountancy, financial service firms are having difficulty finding enough people locally to meet demand and are increasingly reliant on the UK immigration system to bring in non-EU workers on Tier 2 visas. However, with competition for the 1,650 Tier 2 Visas made available each month growing ever fiercer, the financial services industry is likely to face a continued struggle to source highly-skilled workers from outside the European Union.

Mr Curry said: “One of the primary reasons for London’s success as a financial centre is its global outlook and highly-skilled workforce. Yet, as access to foreign talent is continuously being squeezed, it’s inevitable that London’s position as an international financial hub will be weakened.”

SJD Accountancy says that recruiters in the financial services sector do try and fill vacancies using local talent where possible. However, more and more firms are seeking to fill vacancies with workers from outside the European Union, suggesting that skills shortages are becoming more acute.

It is expensive and difficult recruiting staff from outside the EU using the Tier 2 visa scheme, which suggests that companies are growing increasingly desperate to attract talent with skills. Industry experts say that delays in securing talent are detrimental to competitiveness.

Financial services sector continues to struggle

The skills shortage is causing serious problems for the financial services sector. Business leaders across the industry openly opposing government plans to restrict Tier 2 Visas even further which will make the situation even worse.

In November 2015, Workpermit.com reported on a survey conducted by the Chartered Institute for Securities and Investment (CISI), which said that 73 per cent of finance workers think that government proposals to further reduce non-EU worker numbers would harm the UK economy in the long-term.

Commenting on the survey, which ran 24 September – 10 November 2015, Chief Executive of the CISI Simon Culhane said: “The outcome of the survey demonstrates the strength of feeling that exists concerning the issue of recruiting highly-skilled non-EU workers.”

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