Increased levels of investment immigration in UK suggests Brexit Britain still holds global financial appeal
The first three months of 2017 saw a record number of Tier 1 investor visa applications – the highest since 2014, according to ONS figures.
Britain also enjoyed its highest levels of foreign direct investment (FDI) in 2016 since 2005, according to figures released by the Organisation for Economic Co-operation and Development (OECD). UK FDI inflows reached £197bn in 2016, up from £33bn the previous year.
FDI and investment from foreign nationals is highly sought after among nations. Given the perceived benefits of foreign investment, it’s not hard to understand why; job creation, enhanced domestic competition, economic growth and productivity, and overall improvements in living standards.
Many countries have developed so-called ‘golden visas’ to attract foreign wealth. Golden visas offer fast-tracked entry clearance and settlement on favourable terms. The most generous of these schemes include Portugal, Malta and Cyprus.
Prior to Brexit, the UK had enjoyed appeal among non-UK investors as a gateway to the European single market.
Britain was able to place value on its underlying appeal as a stable economy relative to European countries, which resulted a less ‘generous’ investor visa than other countries were offering, while still being able to hold attraction.
These latest figures suggest Britain remains a world-class, desirable destination for investment and settlement for high net worth individuals. However, as the country prepares to depart the EU, to sustain – and strengthen – its appeal, the UK is likely to have to reassess its proposition to foreign investors without the European connection.
How attractive is the UK for investment immigration – UK Tier 1 Investor Visa
There are many reasons why investors look to invest in countries outside their home nation.
Financial opportunity, lifestyle, culture, stability – political, social, economic – and availability of fast-tracked settlement routes.
The Tier 1 Investment Visa was developed to attract foreign investors to Britain.
A Tier 1 Investor visa allows you to invest £2,000,000 or more in UK government bonds, share capital or loan capital in active and trading UK registered companies.
Investor visa holders are permitted (but not obliged) to work, study or engage in business activities in the UK.
In November 2014, the minimum investment value was double from £1 million to £2 million. Applications dropped in the aftermath but these latest ONS figures for UK investor visas suggest buoyancy in immigration investment in the UK.
The threshold also saw applicants turn go the Tier 1 entrepreneur route as an alternative, but this has proven to not always be a suitable option.
Rules on Immigration Investment UK
There are restrictions on the type of investment the Home Office will consider as part of the qualifying sum of £2 million.
You will need to have invested at least £750,000 of your capital in the UK by way of UK Government bonds, share capital or loan capital in active and trading companies that are registered in the UK within 3 months of your investment start date.
There are however restrictions on how yo invest the £750,000:
- Must not be invested through an offshore company or trust. The funds must not be held in offshore custody.
- Must not be invested in open-ended investment companies, investment trust companies or pooled investment vehicles.
- Must not be invested in companies mainly engaged in property investment, property management or property development. This requirement prevents investment in companies whose main function is to own or manage land or buildings. It does not prevent investment in, for example, construction firms, manufacturers or retailers who own their own premises.
- Must not be invested by using deposits with a bank, building society or other enterprise whose normal course of business includes the acceptance of deposits. This exclusion also applies to ISAs, premium bonds and saving certificates issued by the National Savings and Investment Agency (NS&I).
The Home Office will not approve applications that rely on leveraged investment funds.
Non-trading companies and dormant companies will not be accepted for the award of points for loan or share capital.
The Home Office will consider a UK-registered company to be one that meets all of the following requirements:
- has its registerer head office in the UK;
- has a UK business bank account showing transactions for the business that are current; and
- is subject to UK taxation.
Multinational companies that are registered as UK companies with either a registered office or head office in the UK are acceptable.
Investment in share or loan capital in active and trading companies that are registered in the UK can include investment held in foreign currencies.
Settlement through investment immigration
The Tier 1 investor visa UK allows you to apply to settle permanently in the UK after two years if you invest £10 million, after three years if you invest £5 million, or after five years if you invest £2 million.
Note however that any dependent family members that you bring with you must wait five years before they are eligible for settlement.
As part of your application, you will be subject to the relevant eligibility criteria for British Citizenship.
The rules and the application process itself are strict, and vary depending on the circumstances of your application, but with professional advice can be navigated effectively.
Future prospects for foreign investors
Theresa May’s ‘Global Britain’ will need to continue to attract foreign wealth if the UK is to survive and thrive in a post-Brexit economy.
This means retaining favourable entry and settlement routes that will ensure the UK can compete with other nations in attracting this cohort.