The UK plans to charge higher education providers in England £925 a year for each international student under a proposed International Student Levy. The Office for Students would collect the money from 1 August 2028, subject to parliamentary approval.
The Education Secretary confirmed the proposal at the Labour Party Conference 2025, after it was included in the Immigration White Paper. The government published its consultation response and draft legislation on 13 July 2026.
Officials intend to put the measure in the 2026 Autumn Finance Bill. But the Burnham government, which took office on 20 July, has not confirmed whether it will proceed. The planned rate is roughly US$1,250, and would rise with inflation after its first year.
English providers face the charge, with different rules for cross-border courses
The charge applies to higher education providers in England. In franchise deals, joint ventures and other arrangements involving multiple institutions, the provider registered with the regulator would generally be liable.
A provider’s first 220 international students would be excluded from the calculation. Students enrolled in transnational education programmes delivered outside the UK would largely be left out of an institution’s international-student count. English institutions offering courses in Scotland, Wales or Northern Ireland would still owe the levy for those students.
The government has said it will provide more detail on transnational education. It rejected most requests to expand exemptions, including a proposed carve-out for short-term students, saying wider exclusions would conflict with the policy’s aims.
The Department for Education’s technical consultation ran from 26 November 2025 to 18 February 2026 and drew 91 responses from people and organizations connected to higher education. The OfS plans two trial calculations using student records for academic years 2026 to 2027 and 2027 to 2028. Providers will receive the results to help with financial planning and test draft guidance.
Existing data systems, including the Jisc Student Record, are expected to support collection. The government plans to phase in administration, with shadow runs before the charge begins. It will review the rate, while decisions about spending the proceeds are due at the next Spending Review.
Levy receipts are earmarked for grants and wider skills spending
The government says it will reinvest all proceeds in England’s higher education and skills system, including maintenance grants and support for progression through post-16 education. The grants are due to return in 2028.
Eligible undergraduates could receive up to £1,000 in each of their first two years and up to £750 in each later year. Students from households earning no more than £30,000 would qualify in subjects linked to the government’s industrial strategy, expected to include engineering and health.
An impact assessment published in November 2025 projected receipts of £445m in 2028/29, £465m in 2029/30 and £480m in 2030/31. The government had also forecast annual revenue above £400 million.
In a written answer dated 19 October 2026, the Education Secretary put providers’ levy costs below £1 billion over five years. The same answer said inflation-linked increases to tuition-fee caps could bring institutions around £6 billion over that period. The government has said those increases, covering 2026/27 to 2030/31, would offset part of the levy’s cost.
Visa declines have outpaced forecasts, prompting warnings from universities
Home Office figures show student visa applications fell 22 per cent over the past year and more than 30 per cent against the level three years earlier. The Department for Education had modelled a 3.5 per cent decline in international students in 2025/26, followed by outcomes ranging from a 1 per cent fall to a 6 per cent rise depending on course type.
The department estimated the levy itself would reduce international student numbers by 14,000 in its first year, around 3 per cent of the most recent total. Public First’s modelling suggests the loss could reach 77,000 enrolments within five years of implementation.
Libby Hackett, chief executive of the Russell Group, said recent visa data “shows a concerning fall in study visa applications.” She said the trend showed “why the proposed tax on international students is not the right way to deliver much-needed financial support for UK students.”
Vivienne Stern, chief executive of Universities UK, which represents 142 institutions, called the policy “a daft policy” and said the government’s revenue projections were “already unrealistic.” She also said the Home Office had been rejecting more student visas using “increasingly arbitrary and unpredictable criteria.”
The National Union of Students and Russell Group warned that grant funding could prove unstable if falling overseas enrolment reduced levy income. Universities UK has separately argued that international students are sensitive to fee levels, limiting universities’ ability to pass on the charge without shrinking their recruiting pool.
LSE called the proposal “a damaging proposal that effectively amounts to a tax on one of the UK's most successful exports.” Its 2024/25 international student population was 7,980; an estimated annual bill of about £7.2 million would compare with an operating surplus of £10.4 million that year. President and Vice Chancellor Larry Kramer had described the school as “very exposed” because of its substantial international population.
International undergraduates often pay more than £20,000 annually, while the home-student fee cap is £9,790. Nick Hillman, director of the Higher Education Policy Institute, warned that a new tax on student fees could mean less research and a worse student experience if universities cut costs. He has also noted that grants and contracts cover only 67p of every £1 spent on research at UK higher education institutions. The Sutton Trust described the grant scheme as “a positive step to breaking down barriers to opportunity.”
Visa policy changes have added to recruitment pressures. In March, the government barred students from Afghanistan, Cameroon, Myanmar and Sudan, citing their assessed likelihood of claiming asylum after arrival. In June, it lowered from 10 to five per cent the visa-refusal threshold that can cost a university its ability to recruit international applicants.
The government has yet to confirm the legislation’s next step
The government has not settled whether it will add exemptions. In a parliamentary response in September 2026, DfE minister Josh MacAlister said: “As part of the ongoing policy development, the department is considering the merits of exempting any additional groups of international students and will update on this in due course”.
The Education Secretary has also said an updated impact analysis will be published shortly. Parliament must approve the proposed legislation before the planned start date.
