International Student Levy £925 from 2028: How the New Tax Impacts UK Universities and Students
The International Student Levy £925 from 2028 represents a fundamental shift in how the UK government finances its domestic education ambitions.
This new tax, announced in late 2025, specifically targets the revenue English universities generate from overseas talent to fund home-grown maintenance grants.
By implementing this flat-rate fee, the Treasury aims to redistribute the wealth of the higher education sector.
It marks a decisive move toward a “user-pays” model where international recruitment directly subsidizes the social mobility of disadvantaged British students.
What is the International Student Levy £925 from 2028?
Starting on 1 August 2028, every English higher education provider will pay a fixed annual fee for each international student they enroll.
This policy, confirmed in the 2025 Budget, replaces earlier proposals of a percentage-based tax on total tuition income.
The government intends for the Office for Students (OfS) to collect this levy directly from institutions.
While students are not the primary payers, the financial pressure will undoubtedly influence university pricing strategies and support services across England.
How does the 220-student allowance work?
To protect smaller, specialist colleges and niche institutions, the government introduced a critical exemption threshold.
Providers will not be charged the levy on their first 220 international student enrollments each year, ensuring smaller players remain viable.
This allowance serves as a buffer for the “long tail” of the education sector. It prevents local colleges or small arts academies from being disproportionately burdened by a tax aimed at large-scale recruiters like UCL or Manchester.
Where will the generated revenue be spent?
The Treasury expects the International Student Levy £925 from 2028 to generate approximately £445 million in its first year alone.
This massive fund is earmarked for the reintroduction of means-tested maintenance grants for UK students from low-income households.
By 2030, these grants will support domestic students in “priority courses” aligned with the UK’s national industrial strategy.
The government view is that international fees should help “insulate” the next generation of British workers against rising living costs.
Read more: Special educational needs (SEN) funding shortfall: why local authorities are under pressure
Which universities face the largest financial impact?
Large metropolitan universities with massive international cohorts will bear the brunt of the new fiscal landscape.
Institutions like University College London (UCL), currently home to over 27,000 international students, face potential annual bills exceeding £25 million.
Other major players, including the University of Manchester and King’s College London, will see similar multi-million pound liabilities.
These institutions must now decide whether to absorb these costs or pass them on via increased tuition fees.
Is the levy applicable across the entire UK?
Currently, the International Student Levy £925 from 2028 applies exclusively to higher education providers registered in England. Devolved administrations in Scotland, Wales, and Northern Ireland are not included in the current legislative scope.
This regional disparity could create a competitive advantage for Scottish or Welsh universities. If English institutions raise their fees to cover the levy, international students might find better value in Edinburgh or Cardiff.
How will this tax impact university finances and research?
The introduction of the International Student Levy £925 from 2028 comes at a time when university margins are already incredibly tight.
For years, international tuition has acted as a cross-subsidy for loss-making domestic teaching and world-class research.
Removing nearly half a billion pounds from the sector’s pockets will inevitably strain these delicate internal balancing acts.
Many experts warn that without additional support, some universities may be forced to cut essential research programs.
Why is the “cross-subsidy” model under threat?
UK universities currently lose money on every domestic student they teach due to the long-term freeze on home tuition fees. They rely on high international fees to plug this gap and keep their laboratories running.
If the government takes a further £925 per student, that surplus evaporates. This “tax on success” could lead to course closures in vital but expensive subjects like engineering or medicine.
Will international students see higher tuition fees?
While the levy is charged to the university, history suggests that costs are frequently passed down to the consumer.
Analysts estimate that institutions might raise international fees by over £1,000 to cover the levy and administrative overheads.
This price hike could make the UK less competitive compared to Australia or the USA. If the UK becomes seen as a “high-tax” destination for education, student numbers might drop, further harming university revenues.
How does the levy impact international student support?
Universities often use their international surplus to fund specialized support services, from mental health programs to career coaching for global graduates. These “extras” are often the first to go when budgets are slashed by new taxes.
A reduction in these services could harm the overall “student experience” in the UK. If the UK’s reputation for quality support declines, it becomes harder to attract the very students who fund the system.
What is the risk of “stranded” academic infrastructure?
Many universities have invested heavily in new campuses and facilities based on projected growth in international recruitment.
The International Student Levy £925 from 2028 could render these business plans obsolete if recruitment targets are missed.
This risk is particularly high for mid-tier universities that lack the global brand power of the Russell Group. These institutions might find themselves with expensive buildings but not enough revenue to maintain them.
What are the strategic implications for the UK’s global position?
The International Student Levy £925 from 2028 is not just a domestic tax; it is a signal to the global education market. In an era of fierce competition for global talent, any perceived “tax on students” carries significant reputational risk.
The UK must balance its need for domestic social mobility with its ambition to be a global “education superpower.” If this policy backfires, the UK risks losing its status as a top-tier destination for the world’s brightest minds.
How does this align with the 2025 Immigration White Paper?
The levy was first proposed in the May 2025 “Restoring Control” white paper, which sought to balance net migration with economic contribution. The government argues that if the UK hosts international students, the UK should profit directly.
By linking student numbers to maintenance grants, the government is trying to “sell” international education to a domestic audience. It frames overseas students as a solution to local poverty rather than a strain on public services.
What is the “Home vs. International” student analogy?
The relationship is like a premium subscription model in software. The “premium” users (international students) pay a high price that allows the provider to offer “subsidized” or “free” versions to others (domestic students).
If you tax the premium users too heavily, they might switch to a different platform entirely. When the premium users leave, the “free” model for everyone else collapses because there is no one left to pay the bills.
What does the data say about future enrollment trends?
A 2025 impact analysis by the Department for Education estimated that the sector could see 14,000 fewer international students by 2028 due to price sensitivity.
This represents a potential loss of millions in broader economic activity beyond just tuition.
This data highlights the fragility of the international market. Even a seemingly small fee of £925 can trigger a “butterfly effect” across the entire UK economy, from local housing to the retail sector.
Can universities innovate their way out of this?
Some institutions are exploring “transnational education” (TNE), where students study for a UK degree in their home country. Since these students don’t reside in England, they might fall outside the scope of the levy.
However, TNE degrees often command much lower fees than on-campus study. While innovative, it is unlikely that these models can fully replace the revenue lost to the International Student Levy £925 from 2028.
Estimated Financial Impact of the £925 Levy on Top English Universities
| Institution | Est. Int. Students (2028) | Potential Levy Bill | Current Int. Fee Average |
| University College London | 27,500 | £25.2 Million | £28,000 |
| University of Manchester | 19,500 | £17.8 Million | £26,500 |
| King’s College London | 15,800 | £14.4 Million | £27,000 |
| University of Leeds | 15,500 | £14.1 Million | £24,000 |
| University of Oxford | 9,800 | £8.8 Million | £35,000+ |
In summary, the International Student Levy £925 from 2028 is a high-stakes gamble by the UK government.
While it provides a much-needed lifeline for disadvantaged domestic students through maintenance grants, it risks destabilizing the very sector that funds them.
English universities now have less than three years to restructure their finances and recruitment strategies before the first bills arrive.
The ultimate test will be whether the UK can maintain its global appeal while effectively “taxing” the talent it seeks to attract.
Will this new levy make the UK a fairer place to study, or will it simply drive the world’s best students to our competitors? Share your experience with UK university costs in the comments below!
Frequently Asked Questions
Does the levy apply to international students already studying in 2028?
Yes. The International Student Levy £925 from 2028 will apply to all “new and existing” international students registered with a provider on or after 1 August 2028. It is not limited to new starters.
Will I have to pay this £925 directly to the government?
No. The levy is a charge on the university, not the student. However, students should be aware that universities may increase their tuition fees to cover this new institutional cost.
Are PhD students included in the levy?
Current technical consultations suggest the levy will apply to “all international student enrolments” in higher education. Unless a specific exemption is created for research students, they will likely be included in the headcount.
What happens if a university refuses to pay?
The Office for Students (OfS) will have statutory powers to collect the levy. Failure to pay could result in significant fines or the university losing its registration, which would prevent it from enrolling any students.
Why is there a 220-student exemption?
The exemption is designed to protect small and specialist providers. It ensures that the administrative and financial burden doesn’t destroy institutions that only host a handful of international students for specific, high-value courses.
