On 26 February 2015, the UK Government announced changes to the Tier 1 Investor visa scheme which will come into effect on 6 April 2015. The new rules will not affect existing holders of the visa or applicants who apply before that date, both of whom will continue to be covered by the rules in place at the time of their initial application for the visa.
The Tier 1 Investor visa scheme allows non-European citizens and their families to live in the UK in return for an investment of at least £2 million into the UK economy. This flexible scheme can lead to permanent residency in the UK but investors and their families can also choose to spend less time in the UK as suits their business and personal requirements.
The key changes that will take effect on 6 April 2015 are as follows:
- Prior to submitting the initial visa application the applicant must have set up a bank account with a UK bank regulated by the Financial Conduct Authority for the purposes of accepting deposits.The account must have been opened for the purpose of investing not less than the mandatory £2 million in the UK.
Comment – this change is intended to outsource the Home Office's due diligence checks on applicants to the UK banks. It is not clear yet whether (i) the money will need to have been transferred to the UK before the application is made or (ii) if that bank account must then be used to make the investment into the qualifying portfolio. Given that it can take some time for banks to conduct their mandatory anti-money laundering and background checks before they will open a new UK bank account, and that applicants will be required to submit an original letter from the bank with the application, the lead-in time for new visa applications is likely to increase after 6 April.
- The minimum applicant age for Tier 1 Investor visa applications will be raised from 16 to 18 years.
Comment – when making a Tier 1 Investor visa application the applicant must be able to show that, amongst other things, they have control of the funds to be invested. The Home Office has been concerned for some time about whether a 16 or 17 year old can truly have control of the £2 million investment funds. This change is intended to address their concerns.
- The top up provisions (amended in November 2014) are being revised again. Under the new rules, which are being introduced to remove the confusion created by the November 2014 changes, applicants will no longer need to invest additional capital if they sell part of their investments at a loss, but they will be required to maintain all of their original capital within their investment portfolios. Trading of capital will be permitted provided the investor does not withdraw any capital.
Comment - The November 2014 rules which removed the requirement to "top up" the investment level if its market value fell below the relevant threshold meant that investors only needed to purchase new qualifying investments if they sold part of their portfolios. Whilst this change was initially welcomed it led to confusion from advisers and wealth managers about how to value and replace the value of the portion of the investment that was sold or traded. The new rules require that the investor re-invests any proceeds of the sale of investments into qualifying investments (whether or not they are sold at a gain or at a loss). The investor will also have more time to arrange this - until the end of the next reporting period, or within six months of the sale date, whichever is sooner. Under the new rules it will be important at the outset to invest more than the minimum threshold so that the surplus can cover any portfolio management fees, transaction costs and tax on the investments, as these costs cannot be paid from the minimum qualifying investment.
- UK visa caseworkers still hold the power to assess the source of the investor's funds meaning they can refuse an application if they have reasonable grounds to believe that: the applicant is not in control of the investment funds; the funds were obtained unlawfully (or by means which would be unlawful if they happened in the UK); or that the character, conduct or associations of a party providing the funds mean that approving the application is not conducive to the public good.
Comment – whilst the rules do not require submission of additional evidence of source of funds where the £2 million has been held in a bank account for 90 days, we are seeing some overseas British posts and visa officials look more closely at the source of funds. Checks into the "genuineness" of investors and their funds will continue.
- The Home Office will be rolling out the introduction of Biometric Immigration Documents (BIDs) to all out of country visa applications. This means that the Tier 1 Investor visa will be contained on a card which needs to be carried alongside the passport rather than endorsed into the passport. An explanatory letter and a short temporary visa will be issued by the British Consulate when the visa decision is made and the BID will then be collected in person within 10 days of arrival in the UK. If the card is not collected the visa may be cancelled.