The Migration Advisory Committee (MAC), a quasi-independent body of the Home Office which advises the government on migration issues, has published its report on the recent call for evidence as to whether the current provisions of the UK’s investor visa programme under the points-based system of immigration are providing value-for-money for the wider UK economy. The report makes some interesting proposals which, if implemented, could result in a marked departure from the existing investor visa programme.

The MAC has called for the lowest investment amount to be increased from £1m to £2m. In addition, the report has recommended wide-ranging changes to the scope of investments which may be made. The most significant proposals are the changes which would affect the “accelerated route”, introduced in 2011, by replacing it with a “premium route”. If these are implemented they will represent a real departure from the current rules by the introduction of a bidding system which will allow a limited number of premium visas to be auctioned every year. The UK Government will now consider whether to take forward the report’s recommendations by making the relevant changes to the Immigration Rules; the current rules will continue to apply until such date.

Increase in Minimum Threshold

The Tier 1 Investor Visa is awarded based on the applicant’s ability to invest at least £1 million in the UK. Once the visa application is successful, the investor will be able to remain in the UK for a period of three years and four months and may renew their visa for a further two years. After five years in the UK, it may be possible for the investor to apply for settlement and to eventually make an application for British Citizenship. The investments must be made in strict accordance with the immigration rules for the duration of their visa, or the visa may be curtailed.

The MAC has recognised that the £1m threshold for investments has been the same since 1994. It has therefore suggested that the lowest investment threshold is increased in line with earnings, so that the UK investor visa will begin at £2m. This change is perhaps not surprising as the investor route has been very popular since its introduction. It has not been suggested that this continues to be linked to any index, so the increase in the threshold (if accepted) is likely to remain at the same level in the near future.

Proposal for Investments

The current rules provide that investments must be in UK gilts and/or in UK companies by way of loans or share subscriptions. The investments must be maintained at £1m for the duration of the investor’s time in the UK – this requirement to continually monitor and top-up the investment amount has caused investors to prefer the stability of UK gilts as the preferred form of investment, being easier to monitor and retain at the correct level.

The MAC report has recommended that the investment rules be extensively widened, with the intention to encourage investors to move away from UK gilts. The proposal would allow the investor to invest in schemes such as Enterprise Investment Schemes or Venture Capital Trust, or even bonds aimed at infrastructure development. The rules relating to investments in private companies would also be made less restrictive, as the evidential burden of proving these investments is a factor in making them an unattractive option when deciding which investments to make. To reflect the increased risk in these investments, the “top-up” rules would be abolished.

Introduction of the Premium Route

In 2011 the UK Government introduced an accelerated settlement route.  Under this route, persons who invest £5m or £10m may apply for indefinite leave to remain in the UK after three or two years respectively. The MAC proposals would significantly alter this. The report suggests a new “premium route” should be established allowing settlement after two years, with a capped number of 100 visas per year being available to each highest bidder. It suggests that a reserve price of £2.5 million should be set for the sealed bids.

In exchange for the increased costs of the visa, the number of days per year an applicant would need to be present in the UK to achieve indefinite leave to remain would be halved to 90 days. The potential reduction of the number of days which the investor is obliged to spend in the UK provides useful planning opportunities, as it may be possible to meet the residential requirements without becoming UK resident for tax purposes. The premium route, together with the wider class of investments, should therefore offer much more flexibility for the potential investor who has commitments in other parts of the world, but wishes to enjoy the benefits of settled status in the UK.

The report has not made any suggestion for changes to the UK’s naturalisation rules and these will continue to require a much more significant commitment to time spent in the UK before a person becomes eligible for a British passport.