The region’s technology companies will be hit with a new Migrant Skills Levy from April 2017 of up to £1,000 per worker per year, warns Top 40 accountants, Bishop Fleming.
Technology firms recruiting skilled migrant labour from outside the European Economic Area (EEA) through the Tier 2 visa route will, from next year, have to pay the new Levy.
This comes on top of the imposition of a new Apprenticeship Levy which also starts next year. Some employers will have to pay both.
The Migrant Skills Levy, introduced in the Immigration Act 2016, will be imposed on businesses that employ non-European workers who are on salaries of at least £20,800.
The employers will be charged for every worker they bring to the UK, amounting to £1,000 per worker per year, reduced to £364 per worker per year for small employers and charities. The charge will be payable upfront.
For example, bringing a skilled professional from outside Europe to the UK on a five-year Tier 2 visa from April next year will cost a business up to £5,000 in fees. This will be in addition to the Immigration Health Surcharge and Home Office processing costs.
The government says the levy is aimed at redressing an under-investment in skills by UK employers that has resulted in a skills gap, and is also meant to reduce net migration by encouraging employers to invest in the resident workforce rather than hiring from abroad.
It promises to use the money collected through the levy, estimated at around £250m, to contribute to funding training in the UK.
But Bishop Fleming’s Manufacturing, Technology and Innovation (MTI) partner, Nigel Warren, sees this as yet another challenge for businesses operating in the MTI sector.
He said: “This is another tax on a sector that is vital to this country’s future economy. Technology companies are certainly willing to train UK workers, but this takes time and does not solve their urgent need to innovate and develop word-class products and services for which the UK is renowned. Employers in the sector have a pressing need to bring scarce new skills to Britain to help meet the demands of the fast-paced and ever-changing technology landscape.”
Mr Warren added: “This new tax will not achieve the government’s objective of putting a squeeze on overseas recruitment, as we can expect to see between now and next April a real surge in visa applications; and employers will also be encouraging workers already here to renew their visas before the change.
“There is little point the government cracking down on businesses with a big stick when it should be making a more meaningful contribution to the sector through new tax and financial incentives to stimulate the MTI sector, which I hope to see in the November Autumn Statement.”
Bishop Fleming recommends that companies affected by the forthcoming change review their recruitment needs and budget where necessary for the new immigration costs ahead of the April deadline.
UPDATE: – changes to Tier 2 salary levels from 24 November 2016.
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