Another Charge for Businesses: Immigration Skills Levy

The ‘right to work’ of British nationals has been propagated for a while now. Consequently, on 17 January 2017 Theresa May’s Brexit speech shook the hospitality sector, as she announced the government’s plans to push forward with a £1,000 levy on skilled overseas workers in the UK.

In March 2016, the government confirmed that they would reduce the UK’s reliance on migrant workers by imposing a charge on employers who recruit “skilled” overseas employees. This should allow British nationals a better chance at obtaining skilled based jobs and allow the government to meet its commitments to train more that 3million apprentices by 2020. The charge is currently set at £1,000 a year per each employee; yet a reduced amount will be made allowable for small businesses and charitable or not-for-profit organisations.  The charge will apply to non-EU workers from April 2017 and could extend to workers from EU nations post-Brexit.

However, the levy is not being received favourably from sectors such as recruitment, agriculture and hospitality, which recruit and place a large number of skilled migrants into businesses. With the hospitality sector being the fourth largest industry and employing over 4.5million individuals in the UK alone, a levy could be detrimental to the survival of many businesses. Over 700,000 of these employees are from the EU making them the largest group of migrants in the sector. With over 15% of the entire industry migrating from the EU, the charge could be extremely costly and provides significant concerns for the industry.

Currently, business owners are inundated with other proposed charges, such as the Apprenticeship Levy, Late Night Levy and the Sugary Drinks Levy, making it difficult for hospitality businesses to survive. Moreover hospitality businesses are known for employing a significant number of low cost workers who are on zero contracts or are high-season employees. A levy on EU workers who may be commissioned to work on a fixed basis could amount to those businesses incurring thousands of pounds more annually. Additionally, filling the positions of skilled migrant workers would be a difficult, costly and time consuming task that would negatively impact the sector.

Proactive planning should be a priority for all business owners who employ a significant number of non - British nationals. If you would like further advice and would like to discuss your personal situation, contact our hospitality specialist, adam@raffingers.co.uk.