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The UK risks losing hundreds of millions of pounds in long-term tax revenue if it increases salary requirements for migrant workers beyond current levels, according to a comprehensive review by the Migration Advisory Committee (MAC). The report warns that higher pay thresholds could prevent entry for migrants who would otherwise contribute positively to public finances, at a time when the government is trying to reduce immigration without damaging economic growth.
Current Policy and Political Context
Under the Skilled Worker visa route, most overseas applicants must now earn a minimum of £41,700 a year, following significant increases introduced in 2024 and a routine adjustment in 2025. Some roles are subject to even higher minimum salaries due to occupation-specific pay rules. When the review was commissioned earlier this year, former Home Secretary Yvette Cooper argued that salary thresholds should continue rising to ensure overseas recruitment does not undercut fair wages for UK workers.
Immigration remains a key concern for voters, particularly as the Labour government faces political pressure from Reform UK, led by Nigel Farage. Ministers are attempting to keep net migration low after years of record levels, while also protecting productivity and public finances.
Financial Consequences of Higher Thresholds
The MAC concluded that increasing the general salary threshold significantly above £41,700 would likely reduce, rather than boost, tax revenues. Its modelling suggests that raising the threshold to £52,500 could result in a lifetime fiscal loss of between £520 million and £710 million for each annual group of skilled migrants, as many economically beneficial workers would be excluded.
The report highlights that most Skilled Worker visa holders already earn well above the minimum salary. About 40% earn more than twice the threshold, and the top 10% of earners generate nearly 40% of the total lifetime fiscal benefit of each migrant cohort. This means that raising thresholds further risks blocking workers who still pay more in taxes than they cost in public services.
Concerns Over Occupation-Specific Salary Rules
The MAC was particularly critical of occupation-specific salary thresholds, which were raised by the previous Conservative government from the lower quartile of pay to the median level within each profession. The committee argued that this change does little to prevent wage undercutting and instead creates unfair distortions.
MAC chair Brian Bell said the median threshold is too high to serve its intended purpose. He noted that the current system advantages lower-paid roles and employers based in London, where wages are typically higher. Bell highlighted the inconsistency that allows a librarian to be hired from abroad on £41,700, while preventing recruitment of an IT director earning £85,000.
The committee recommended restoring occupation-specific thresholds to the 25th percentile of pay and relying primarily on the general salary threshold to manage migration levels and fiscal outcomes.
Policy Alternatives for Ministers
The MAC presented several options for the government. Keeping the general threshold at £41,700 while lowering occupation-specific pay requirements could generate an estimated £660 million net fiscal gain per annual cohort, while increasing long-term net migration by around 4,000 people. Alternatively, raising the general threshold to £48,400 while reducing occupation-specific rates could keep migration numbers broadly stable without harming public finances.
The report also suggested that large further reductions in net migration are unlikely. Bell noted that asylum and family migration routes are difficult to restrict significantly, limiting how far overall numbers can fall.
Other Visa Routes and Recommendations
Beyond the Skilled Worker route, the MAC advised scrapping the Scale-Up Worker visa, which allows rapidly growing companies to recruit from overseas. Fewer than 100 visas were issued under this scheme last year, and the committee said it adds complexity without delivering clear benefits. If retained, its salary requirements should match those of the Skilled Worker route.
The review also examined health, care, and temporary shortage visas, stressing that pay rules should strike a balance between fair wages, regional pay differences, and economic needs, without unnecessary complexity.
Migration Trends and Social Considerations
Net migration has already declined sharply, falling from a peak of 944,000 in the year to March 2023 to around 204,000 by June 2025, largely due to earlier policy changes. The MAC warned that further tightening could carry significant economic costs.
The report also analysed the fiscal impact of migrant partners, finding they represent an estimated lifetime net cost of £109,000, compared with a £110,000 contribution from UK residents of the same age. Bell said such figures must be balanced against social factors, including the importance of family unity.
