International student levy ‘poses risks for UK talent and research’

Shara Pledger of Pinsent Masons was commenting after the government published draft legislation that, if implemented, would provide the legal basis for the levy to be introduced. The provisions are expected to be included in the next Finance Bill this autumn.

Under the proposed new legislation, higher education providers registered with the Office for Students would be liable for a £925 levy per international student they enrol for each academic year, starting from 1 August 2028 – although providers will not be charged a levy on the first 220 international students per year, under an allowance provided for in the draft legislation, and some exemptions could also apply.

In relation to exemptions, the government said details of the precise scope of the levy will be set out in secondary legislation. However, it has indicated that students studying entirely on non-UK campuses, entirely via long-distance learning outside of the UK, or some combination of the two, will fall outside the scope of the levy – even if tuition fees for those students are gathered by UK-based providers.

The government intends to give itself the power to apply exemptions, amend the rate of the levy over time, and amend the allowance, via regulations that would follow the Finance Bill.

Pledger said: “The levy operates as a fiscal disincentive to international student recruitment, effectively encouraging universities to self-limit their intake and thereby reduce Student visa numbers without the government needing to impose direct visa caps. This sits in direct tension with the UK government's international education strategy, which has historically targeted growth in international student numbers.”

“If institutions respond by cutting recruitment or raising fees to uncompetitive levels, the UK risks losing market share to rival destinations, with broader consequences for soft power, research capacity, and the graduate talent pipeline,” she said.

The idea for an international student levy was set out in the government’s immigration white paper last year. It subsequently consulted on the levy’s introduction (15-page / 1.26MB PDF) over the winter and has now published its response (26-PAGE / 1.01MB PDF) to that consultation alongside the draft legislation.

The Department for Education said: “The income raised by the introduction of the international student levy on providers will be fully reinvested into the higher education and skills system, to support the reintroduction of targeted maintenance grants, progression through the post-16 system, and for wider skills. The levy will therefore ensure that the proceeds from international students directly benefit domestic students. Future decisions on deployment of the proceeds of the levy within the higher education and skills system will be set out at the next Spending Review.”