£1,035 per person per year. That's the headline rate for the UK Immigration Health Surcharge (IHS) in 2026, and it's the number most HR systems and workforce budget models start with. It's also where most of them stop — which is why IHS calculations are consistently wrong in ways that compound across multi-year workforce plans.
This is a reference post for HR teams, finance functions, and anyone building compliance tooling around UK sponsored worker costs. The calculation model you're probably using has at least three structural gaps.
Gap 1: The Grant Date vs Entry Date Problem
The IHS is calculated from the date of visa grant, not the date of UK entry. For applicants applying from overseas — which is the majority of Skilled Worker cases — there's typically a gap between when the visa is issued and when the worker actually arrives.
That gap is paid for. There's no partial-period refund for days outside the UK between grant and entry. In a budget model, if you're estimating IHS costs based on employment start dates rather than visa grant dates, you're systematically undercosting applications where the worker arrives after the grant.
For a five-year Skilled Worker visa with a three-month entry gap, the miscalculation is £776 per person at current rates. Multiply that across a hiring cohort, and it's material.
Gap 2: Extension Applications Reset the Clock
IHS calculations don't carry over between applications. When a sponsored worker extends their Skilled Worker visa, the extension application triggers a fresh IHS calculation for the extension period. There is no credit for unused time on the expiring visa.
This matters for budget modelling in two scenarios:
Early extensions. If an employer applies to extend a worker's visa before it expires — which is common to maintain continuity of right to work — the worker pays IHS for any overlap period twice.
Route switches. A worker switching from a Graduate visa to a Skilled Worker visa before their Graduate visa expires loses whatever IHS they've already paid for the remaining Graduate period. The Skilled Worker application starts from zero, at the full adult rate of £1,035/year rather than the student rate of £776/year.
Most compliance systems model this as a single cost event per visa category. The multi-event, no-carryover reality costs more.
Gap 3: The Children's Rate Changed in January 2024
Before January 2024, children under 18 paid a reduced IHS rate of £776/year. From that date, the rate was harmonised to £1,035/year — matching the adult rate.
HR systems and budget templates built before 2024 often still carry the old rate for dependants. For a worker with two children on a five-year visa, that's a discrepancy of £2,590 against current actual costs.
The rate at application time locks in for the full visa period. So existing visa holders aren't retrospectively charged for rate increases — but new applications, including extensions and switches, use the current rate.
The Refund Mechanic Most Employers Miss
Three scenarios trigger an IHS refund:
- The application is refused
- The visa granted is shorter than the period paid for
- The worker leaves the UK permanently before their visa expires
Refunds are claimed through the UKVI refund portal, separately from the visa application system. The paying party claims — which is the employer if they covered the IHS on the worker's behalf.
This creates an operational issue: if the employment relationship ends before the worker leaves the UK, the employer (as paying party) has no automatic trigger to claim the refund. The worker, as visa holder, has no direct claim route on payments made by the employer. Neither party has a clear contractual obligation to initiate the process, and the refund window isn't formally defined.
In practice, this means unclaimed IHS refunds are common in workforce transitions. Building a process to track departure dates and initiate refund claims is worth the overhead — at £1,035/year per head, a six-month early departure represents £517.50 per worker.
What This Looks Like in a Compliance System
If you're building or maintaining an HR system that models sponsored worker costs, the IHS component needs to account for:
- Grant date, not employment start date, as the calculation baseline
- Per-application calculation with no carryover between extensions or route switches
- Current rate tables, updated as of the application date (not a static rate)
- Dependant count and ages at application, using the current children's rate
- A refund-tracking workflow triggered by departure confirmation
The default spreadsheet model — headcount × rate × years — will produce a number. That number will be systematically low for overseas applicants, families with children, and workers who extend or switch routes.
For checking whether a UK employer actually holds an active sponsor licence before you model any of this, the sponsor register search at immigrationgpt.co.uk covers 125,000+ licensed companies with real-time register data.
General information only. Not legal or immigration advice. Verify current IHS rates and refund rules with a regulated immigration adviser before submitting applications.
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