Asylum seekers will be required to repay up to £10,000 to the Home Office to cover the cost of their housing and financial support once they start work, under new plans that function like a student loan. The repayment scheme, part of the Immigration and Asylum Bill introduced to Parliament on Tuesday, June 30, 2026, is designed to recoup costs incurred by the state while claims are processed. Successful repayment of the full sum will be a prerequisite for being granted settled status or Indefinite Leave to Remain in the UK.
Repayment plan details
The Home Office will recover costs from adults who have been housed or received financial support while waiting for an asylum decision. Eligible adults will make monthly payments once their earnings exceed an income threshold that has yet to be defined. The total amount to be repaid is approximately £10,000, though Home Secretary Shabana Mahmood has the power to adjust the figure. The policy applies only to adults who have “sufficient” funds, with exemptions for children and safeguards intended to prevent destitution for those unable to pay. Individuals who are liable for the cost and leave the UK will be required to settle the balance in full if they wish to return in the future.
Ms Mahmood said: “The cost of asylum accommodation on the British taxpayer is too high. We have already reduced asylum costs by £1bn, but it is also right that we ask those who can contribute to do so. Receiving asylum support is a right, but it is also a responsibility. Once people can contribute and repay the generosity of the British people, we expect them to do so.”
Financial implications
The government reported spending £4 billion on accommodation and support for asylum seekers in 2025. The Home Office estimates the average cost per person per night is £23.25 in dispersal accommodation, such as multi-occupancy hostels, and £144 in hotels. Weekly subsistence payments range from £9.95 to £49.18 per person. According to analysis by the think tank IPPR, the average annual cost of housing and supporting an asylum seeker was approximately £41,000 in 2023-24. The asylum support budget rose from £739 million in 2019/20 to an expected £4.7 billion in 2023/24, and was previously costing the taxpayer £1.5 billion a year in April 2022.
Marley Morris, associate director at the IPPR, said there are “better ways of bring down” the costs of asylum such as “speeding up asylum processing and appeals, reforming the existing asylum contracts.” The IPPR has also recommended decentralising budgets and powers to regional bodies to manage asylum accommodation, and has criticised the high costs of the Rwanda scheme, estimating potential costs of up to £3.9 billion.
However, the likely impact of the repayment scheme on public finances has been questioned. Dr Madeleine Sumption, director of the Migration Observatory at the University of Oxford, noted that data suggests a relatively small share of people granted asylum would earn enough to contribute to the scheme unless income thresholds were set significantly below the minimum wage. She said the impact on public finances would likely be “relatively small.” Government figures from 2015 to 2023 show that a quarter of 16- to 64-year-olds granted asylum were in employment within the same year they were granted status, rising to half after two years. Eight years after receiving refugee status, 37 per cent of those in employment were in full-time work with median earnings of £23,000. However, a GOV.UK report found that 77 per cent of employed refugees earned less than £10,000 in their first year of status, and 36 per cent were still earning under £10,000 eight years later. The median annual earnings for refugees eight years after status was £13,000.
Asylum seekers in the UK are generally not allowed to work while waiting for a decision on their claim. If they have been waiting for more than a year, they can apply for permission to work, but this has been restricted to jobs on the shortage occupation list. Reports suggest that restriction was abolished in March 2026, potentially allowing employment in any higher-skilled job after 12 months.
Criticism and concerns
Charities and campaigners have strongly criticised the plans as “performative cruelty” that fail to “tackle chronic delays in the asylum system, which is the real reason people spend years in asylum accommodation”. Imran Hussain, director of external affairs at Refugee Council, said the plan “amounts to an extra tax on refugees.” Zoe Dexter, housing manager at the Helen Bamber Foundation, warned it would harm integration, saying: “Burdening them with debt just as they begin rebuilding their lives is grossly unjust and entirely self-defeating.” Kolbassia Haoussou, from Freedom from Torture, said: “As someone with lived experience of the UK asylum system, I am deeply shocked by this proposal. I struggle to see what is fair about asking some of the most vulnerable people in our society – including survivors of torture and sexual violence – to repay the cost of the support they were forced to rely on.”
The charity Asylum Aid has warned that recent changes making refugee status temporary will impede asylum seekers’ ability to find work. Charlotte Khan, at Care4Calais, said: “What a Labour government should be doing is lifting the ban on people seeking sanctuary from working. That’s a real solution that benefits the person seeking sanctuary and the UK economy, not this latest harebrained idea that lacks detail and credibility.” Concerns have also been raised that the scheme could discourage asylum seekers from taking up employment due to a higher effective tax rate.
Wider asylum system changes
The repayment plan is part of a broader set of reforms. In March, the home secretary changed the amount of time a refugee can stay in the UK. Asylum seekers’ cases will now be reviewed every 30 months, after which they could be sent back to their country of origin. Previously, refugees with successful asylum claims were given a five-year visa and could apply to stay indefinitely after five years. Over the weekend, Ms Mahmood announced the introduction of new safe routes for refugees to enable communities and certain “trusted” universities to sponsor refugees seeking sanctuary in the UK. The initiative was inspired by a Canadian scheme that has successfully settled 400,000 people since 1979. The Home Office has also been looking to the Canadian asylum system for inspiration on cost recovery. In Canada, resettled refugees are responsible for paying for travel documents, some medical services, and the transportation costs of getting to Canada, with repayments starting one year after arrival. A separate route allowing employers to sponsor refugees is also anticipated to launch next year, which could connect refugee resettlement with the UK’s employer sponsorship system. Details of this route are yet to be confirmed. Other European countries do not require asylum seekers to pay back the costs of their support. Shadow Home Secretary Chris Philp noted that this policy was previously proposed by the Conservative Party and blocked by Labour.
