The Home Office mistakenly paid at least £18.7 million in incorrect Immigration Health Surcharge refunds, with officials admitting it remains uncertain how much of the taxpayers’ money can be recovered.
The payments were made through the Immigration Health Surcharge (IHS) reimbursement scheme after an administrative error resulted in foreign nationals receiving refunds for periods for which they were not entitled to claim.
According to the department’s annual report, payments were issued for periods which did not correspond with the underlying Immigration Health Surcharge payments.
Officials are now examining ways of recovering the money, although the report acknowledged that recoverability remains uncertain.
The IHS is generally paid by people coming to the UK on visas lasting more than six months and contributes towards their access to NHS services.
The report states overseas workers face an annual surcharge of £1,035, while the rate for students and children is £776 a year.
The £18.7 million refund error was among a series of costly problems identified during the 2025/26 financial year.
Another £22.9 million was spent on the Atrium Hotel in Hounslow, west London, despite the accommodation remaining completely empty throughout a nine-month contract agreed in August 2025.
The accommodation had been secured because officials anticipated increased asylum applications could result in the Manston processing centre in Kent exceeding its legal operating requirements.
However, lower-than-expected demand and improved efficiency meant the hotel was ultimately not required.
The Home Office also recorded £3.2 million in cancelled deportation flights, described in official documents as “fruitless payments”.
A further £35.2 million was lost following problems with a contract to upgrade the Police National Database.
The agreement with CGI IT UK Ltd, approved in January 2024, was eventually terminated following delays, rising costs and concerns over the delivery plan.
Meanwhile, £14.9 million was written off following the acquisition of the former Ministry of Defence site at Northeye in Bexhill, East Sussex.
The site had been intended to accommodate asylum seekers but was never brought into use. Remediation costs ultimately made the project unviable, and the initial investment was not recovered.
Shadow Home Secretary Chris Philp described the losses as a “catastrophic waste” of taxpayers’ money and criticised the Government’s handling of immigration and asylum spending.
A Department of Health and Social Care spokesman said immediate action had been taken to prevent further incorrect payments.
The department said enhanced checks and controls had been introduced and maintained that the error had no impact on frontline NHS services or patient care.
