On 16 October 2014, the UK Government announced changes to the Tier 1 Investor visa scheme, which will come into effect on 6 November 2014. The changes represent the Government's response to various recommendations made by the Migration Advisory Committee (MAC) in February 2014. The new rules will not affect existing holders of the visa.
At present, 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 £1 million into the UK economy. The key changes that will take effect on 6 November 2014 are as follows:
- The minimum investment required to qualify for an investor visa will increase from £1 million to £2 million. This increase was widely expected as the threshold has been £1 million for the past 20 years and was a key recommendation made by the MAC.
- The entire £2 million investment must be by way of share or loan capital in active and trading UK companies, or alternatively UK Government bonds. This change will remove the current ability for investors to hold up to 25% of the funds in a UK bank account or to allocate up to 25% of the investment into UK assets like their own home. Most investors tend to invest 100% of the funds into a qualifying portfolio to make the investment process simpler, so this change should not have a material impact.
- The current requirement that the investment must be “topped up” if its market value falls below the relevant threshold is being removed. Instead Tier 1 Investors will only need to purchase new qualifying investments if they sell part of their portfolios and need to replace them in order to maintain the investment threshold, in which case the replacement investment must be made within the same reporting period. This change will be welcomed and is presumably designed to encourage more investment in UK companies rather than gilts.
- The current (rarely used) concession that allows an investor to rely on a loan from a UK financial institution as the required investment funds is being removed.
- UK visa caseworkers are being given new powers to assess the source of the investor's funds. They can refuse a Tier 1 Investor application if they have reasonable grounds to believe that the investor applicant is not in control of the investment funds; that 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. As this test is more subjective in nature, applicants may need to disclose more paperwork about the source of their funds and future plans in the application to give UK visa decision-makers comfort about the legitimacy of the investment funds.
- The Government plans to "consult further on what sort of investment the route should encourage in order to deliver real economic benefits" to the UK, which will be welcomed. Based on the MAC's report in February 2014, we expect the Government to look at widening the permitted class of qualifying investments to charitable/good causes, Venture Capital schemes and angel investments, infrastructure projects and other investments more likely to increase the benefit to the UK, and to reduce or remove the current reliance on gilts. The outcome of the consultation is likely to be announced in 2015.
None of the changes taking effect on 6 November will apply to existing Tier 1 Investors, so they will continue to be covered by current rules, including the £1 million investment level and the top-up requirement.
Any potential investors who wish to benefit from the £1 million threshold must submit their visa applications on or before 5 November 2014. For overseas applications the "application date" is the date of submission of the online form and payment of the visa fee (provided that the applicant has all of the necessary supporting documents and evidence of qualifying funds at that date), even if the biometric appointment, submission of hard copy documents or the visa decision is after 5 November.