The Tier 1 investor category is designed to allow HNW individuals to make a substantial financial investment in the United Kingdom. On the 16 October 2014, the immigration minister announced the much anticipated changes to the Tier 1 Investor route raising the minimum funds required from £1 million to £2 million.

The changes being introduced follow the publication of the MAC report earlier this year that we analysed in our April update. For a comparison table of the current system, the MAC recommendations and the changes click here.

A full summary of the changes that will apply to new applications submitted on or after 6 November 2014 can be seen below:

Money and investment

  • The minimum level of funds of £1 million is being increased to £2 million. This increase comes 20 years after the threshold was first set.
  • It is no longer possible to rely on loaned funds from a UK- regulated financial institution. This option was of little use given the reluctance of these financial institutions to lend against overseas assets.
  • The investment amount is being increased from 75% to 100%. This means that there will no longer be an option to use some of the funds towards the purchase of a home in the UK, for example.
  • Government bonds are still with us and the permitted investments remain as:
  • UK Government bonds
  • share capital or loan capital in active and trading UK registered companies.
  • the need to make up the shortfall if the value of the investments falls has been removed. This means that more risk can be taken with investments without the fear of having to make up the difference if these do not provide the desired return. However, if the value falls below the purchase price due to the applicant selling some of the investments in the portfolio, then this will need to be made up in the same reporting period

Subjective assessments of applications

Tier 1 Investor category was one of the few categories under which applications were still being objectively assessed. This is set to change from 6 November 2014. Applications submitted on or after that date could be refused if there are 'reasonable grounds' to believe that:

  • the applicant is not really in control of the funds to freely invest them
  • the funds are derived unlawfully
  • where a third party is involved, the character, conduct or associations of that third party mean that approving the application would not be conducive to the public good

There is no indication yet about what would constitute 'reasonable grounds' and what the caseworker will be relying on to carry out their assessment. As a result, it is expected that further information will need to be submitted with an applications to ensure that the Home Office is satisfied with the control element and the legitimacy of the source of funds.

The immigration minister also confirmed that further consultations will follow on the type of investment the route should encourage in order to deliver real economic benefits and other improvements to the route. We will be participating in these consultations and will provide an update as soon as the consultation document is published.

It is expected that there will be a surge in applications from those wishing to rely on the lower amount. However, this decision should be properly considered taking into account all factors.