The UK could lose hundreds of millions of pounds in annual tax revenues if salary thresholds for migrant workers are raised beyond current levels, according to a detailed review by the Migration Advisory Committee (MAC). The report warns that higher thresholds may block skilled migrants who would otherwise make a significant net contribution to public finances, at a time when the government faces pressure to control immigration while supporting economic growth.
Under existing rules, most foreign workers applying under the Skilled Worker visa route must earn at least £41,700 a year, following increases introduced in 2024 and routine adjustments in 2025. Some occupations have higher thresholds due to occupation-specific salary floors. Former Home Secretary Yvette Cooper highlighted earlier this year that salary thresholds must rise to prevent cheap international recruitment from undercutting domestic wages.
The MAC’s analysis found that raising the general salary threshold to £52,500 could result in a lifetime fiscal loss of £520 million to £710 million per annual cohort of skilled migrants. Many migrants who would contribute positively to the economy could be excluded. Around 40% of Skilled Worker migrants earn more than double the minimum threshold, and the top 10% of earners provide nearly 40% of each cohort’s total lifetime fiscal contribution, meaning raising thresholds too high risks losing significant tax revenue.
The committee criticized occupation-specific thresholds being set at the median salary, arguing this distorts access to the UK labor market. MAC Chair Brian Bell explained that the current system favors certain occupations and regions, creating inconsistencies. He noted it is illogical that a librarian could enter the UK at £41,700 while an IT director earning £85,000 could be excluded. The MAC recommends returning occupation-specific thresholds to the 25th percentile while keeping the general threshold as the main tool for managing migration numbers and fiscal impact.
Alternative policy options outlined by the MAC include keeping the general threshold at £41,700 and lowering occupation-specific thresholds, which could deliver an estimated £660 million net fiscal gain per annual cohort while increasing long-term net migration by about 4,000 people. Raising the general threshold to £48,400 combined with lower occupation-specific rates could maintain current migration levels without causing a fiscal loss. The committee also reviewed other visa routes, suggesting the Scale-Up Worker visa be scrapped due to minimal uptake, though if retained, its thresholds should align with the Skilled Worker route. Health, care, and temporary shortage routes were also examined, with recommendations to ensure fair pay, account for regional wage differences, and address economic needs without adding unnecessary complexity.
Net migration has already dropped sharply, from a peak of 944,000 in the year ending March 2023 to roughly 204,000 in the year ending June 2025. The MAC warned that further tightening of salary rules could have clear economic consequences. The report also highlighted that migrant partners carry an estimated lifetime net fiscal cost of £109,000, compared with £110,000 contributed by UK residents of the same age, emphasizing the need to balance fiscal considerations with social issues such as family reunification.
The MAC concluded that while salary thresholds are a useful tool for managing migration, pushing them too high risks undermining tax revenue, productivity, and overall economic benefits derived from skilled migration.