Asylum seekers will be made to pay up to £10,000 towards the cost of their accommodation and support once they start earning, Shabana Mahmood has announced.
They must pay off the full amount before they can be eligible for settled status under the plans.
Eligible adults will likely pay off an amount each month above a set threshold – similar to a student loan.
Migrants need settled status, or indefinite leave to remain, to be able to permanently live, work, and study in the UK.
The Government said it spent £4 billion on accommodation and support for asylum seekers last year, and the Home Office estimates the average cost per person per night of accommodating asylum seekers is £23.25 in dispersal accommodation and £144 in hotels – while subsistence payments range from £9.95 to £49.18 per person per week.
Home Secretary Ms Mahmood described the cost is “too high”.
“We have already reduced asylum costs by £1 billion, but it is also right that we ask those who can contribute to do so,” she added.
“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.”
Asylum seekers are expected to have to pay a total of around £10,000, but the Home Secretary will be able to adjust the amount, the Home Office said.
Those liable for the cost who leave the UK will be made to pay in full if they want to come back at a future date, the department added.
The powers needed to recover the costs will be set out by the Immigration and Asylum Bill when it is introduced to Parliament on Tuesday.
Zoe Dexter, from the Helen Bamber Foundation human rights charity, said the plan amounted to “more performative cruelty from the Government”.
“Charging refugees around £10,000 once they finally find work is the opposite of integration,” she said.
“These are people who have fled persecution and extreme violence, often arriving with nothing, before spending months or years in overcrowded, dilapidated accommodation, sometimes facing intimidation and violent protests outside the places they are housed.
“Burdening them with debt just as they begin rebuilding their lives is grossly unjust and entirely self-defeating.”
Imran Hussain, of the Refugee Council, said: “Imposing what amounts to an extra tax on refugees, who the Home Office accepts have arrived here after fleeing persecution, torture and war, is unfair, impractical and make it much harder for families to rebuild their lives and stand on their own feet.
“The reason why many need asylum support is because the Home Office itself bans asylum seekers from working while their claims are being assessed.
“Asylum support is only given to people who are at risk of being destitute, so this new financial burden would only harm those who arrive on our shores with nothing.”
Shadow home secretary Chris Philp said: “It is flattering that Labour have adopted yet another policy put forward by the Conservative Party.
“This precise scheme was proposed by us in an amendment to the Immigration Bill last year, which Labour blocked.”
It comes after the Home Office revealed it is planning to use more former military barracks to house thousands of asylum seekers in its quest to shut all asylum hotels by the next election.
The number of people being housed in hotels has fallen to its lowest level since data was first reported in 2022, according to Home Office figures published last month.
Other reforms set to be laid out on Tuesday include creating a “single route” that prevents migrants from appealing against a rejected claim and bringing further claims about new matters before their removal.
The backlog of asylum appeals meanwhile stands at 151,767, Home Office minister Lord Hanson of Flint said on Monday.
Appeals are taking an average of 61 weeks to be resolved as of March 2026, he told the Lords.
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