Nuffield Trust warns of unfairness and uncertainty over NHS funding from Immigration Health Surcharge

A briefing published yesterday by the Nuffield Trust finds that the immigration health surcharge (IHS) has become an increasingly significant source of funding for the NHS, meaning it is now potentially vulnerable to sudden large reductions in immigrant numbers.

You can read the briefing online here.

The surcharge, introduced in 2015, is paid by most people applying for UK work and study visas, in addition to their visa application fees. The standard annual rate rose to £1,035 in 2024, with a discounted rate of £776 for eligible students and certain dependants.

Nuffield Trust noted that surcharge income reached a peak of almost £2.5 billion in 2024/25, equivalent to around 1% of NHS spending. However, income fell by more than £100 million in 2025/26 as migration declined.

The briefing raises questions about whether the charge accurately reflects the healthcare costs of those who pay it. The Department of Health and Social Care estimated annual healthcare costs of £1,036 per payer, but Nuffield Trust said this figure depends on assumptions about the use of services outside hospitals.

Questions are also raised over the fairness of the IHS.

The briefing states: "As visa holders – by and large – pay the same taxes as other UK residents, they risk being charged once for their health care through the IHS, and again through taxation. Tax contributions and health care use vary across visa types, income levels, and age groups, meaning a flat charge based on average costs will inevitably over- and under-charge different individuals. But where groups are systematically overcharged, this creates a potential tension around whether they are in practice contributing more relative to their health care use than comparable UK residents, and what the consequences for NHS resources might be of a substantial reduction in immigration, beyond the significant impact on workforce availability. "

In addition, Nuffield Trust estimates that people who pay the surcharge contributed at least 60% more towards the NHS budget in 2023/24 than the government's estimated healthcare costs for that group. It notes: "This raises important questions about fairness, and flags a vulnerability for the NHS if immigration numbers were to fall further. This vulnerability is compounded by uncertainty about migration flows at a time of significant policy change in this area."

The report further highlights a potential financial risk arising from the way surcharge payments are collected. Visa holders generally pay for the full duration of their visas upfront, and the income is transferred to the NHS in the year the visa is granted. A subsequent fall in migration can therefore reduce annual revenue even while existing visa holders remain eligible for NHS care.