United Kingdom & BREXIT

New Startup and Innovator visa categories

GPB 50.000

The UK Government has proposed fundamental changes

to the Tier 1 visa category through a Statement of Changes released today.

Changes include: Introduction of new Start-up and Innovator visa categories to replace the Tier 1 (Graduate Entrepreneur) and Tier 1 (Entrepreneur) routes, with applicants in these categories assessed by trusted endorsement bodies vetted by the UK government;

The situation

In a Statement of Changes, the UK government has proposed the introduction of new Start-up and Innovator visa categories to replace the Tier 1 (Graduate Entrepreneur) and Tier 1 (Entrepreneur) routes, together with restricted rules for the Tier 1 (Investor) route.

A closer look – the Start-up visa

Tier 1 (Graduate Entrepreneur) route to be closed. The Start-up visa would replace the graduate entrepreneur route which would be closed to new applicants from July 5, 2019.

Expanded eligibility. The category would be open to applicants starting a new business for the first time in the United Kingdom, not just recent graduates.

Removal of funding requirement. Applicants would not need to have secured any initial funding for their proposed business.

New endorsing bodies. Applicants would need to be endorsed by an independent endorsing body which has been vetted and approved by the UK government.

Longer visa validity. The visa would be granted for two years initially (doubled from one year under the Graduate Entrepreneur category) and applicants would be able to switch into the Innovator category to continue progressing their business.

Effect on existing Tier 1 (Graduate Entrepreneurs). Transitional provisions would allow Tier 1 (Graduate Entrepreneurs) to switch into the Start-up route or alternatively continue to switch into the Tier 1 (Entrepreneur) category until July 5, 2021.

A closer look – the Innovator visa

Tier 1 (Entrepreneur) route to be closed. The Innovator visa would replace the Tier 1 (Entrepreneur) route which would be closed to new applicants from March 29, 2019.

New expert endorsement requirement. Applicants would need to be endorsed by a designated endorsing body approved by the UK government, who would assess whether the applicant’s proposed business is innovative, viable and scalable. The Home Office has not confirmed which bodies would be authorised to issue endorsements yet, but has set out criteria with which the endorsing bodies must comply.

Eligibility for Indefinite Leave to Remain (settlement). Innovators who satisfy at least two of the Home Office’s new criteria may qualify for settlement after three years, down from five under the existing route. The criteria include:

Investing at least GBP 50,000 into a business;

Doubling the business’s customers;

Applying for intellectual property protection after research and development activity;

Generating annual gross revenue of GBP 1 million;

Creating 10 full-time jobs for resident workers.

Effect on existing Tier 1 (Entrepreneurs). Existing Entrepreneurs can continue to extend their visa under the current rules until April 5, 2023, but would be required to provide more detailed information on their role in the business and the jobs they have created. Settlement applications for existing Entrepreneurs will remain open until April 5, 2025.

A closer look – the Investor visa

Increased scrutiny over funding. New Investor visa applicants would need to prove they have had control of the required GBP 2,000,000 investment funds for the last two years, up from 90 days under the existing rules. If the funds have been held for a shorter period, applicants would need demonstrate the source of the investment funds. An expanded test will allow the Home Office to refuse applications where there are grounds to believe the investment funds have been transferred internationally by unlawful means. Further, rules are being restricted to make it explicit that banks must carry out all due diligence checks before opening accounts for potential applicants.

Investment in government bonds no longer accepted. Under the proposed changes, investment in government bonds would be precluded, to incentivise investment in active and trading UK companies.

Effective date. The proposed changes will apply to all new applications made on or after March 29, 2019. Transitional provisions are in place to protect existing Tier 1 Investors, who can apply to extend their visa under the existing rules (subject to some minor alterations) until April 5, 2023 and apply for settlement until April 5, 2023.

The above proposals do not affect the Tier 1 (Exceptional Talent) category.

Impact

The changes should broaden the scope for overseas entrepreneurs to start a business in the United Kingdom with reduced or no prior funding. The changes would also place the role of assessing the viability of proposed businesses on new endorsing bodies, rather than Home Office officials.

By contrast, the proposed changes require prospective Tier 1 Investors to demonstrate the source of their funds over a much longer period. The changes should also encourage direct investment in UK companies rather than via government bonds.

Background

The proposed changes follow a review by the independent Migration Advisory committee, which recommended that an endorsement approach should be introduced in the Tier 1 (Entrepreneur) category. The committee further recommended substantial reform to the Entrepreneur category on the grounds that it had produced low quality businesses which added little or no benefit to the UK economy.

The changes are designed to encourage the development of and investment in viable, innovative and scalable businesses in the United Kingdom.

The proposed changes to the investor visa were announced in December but were not implemented pending research on the best way to achieve the desired policy goals.

Looking ahead

The government proposals are scheduled to take effect on March 29, 2019 (July 5, 2019 for the closure of the Graduate Entrepreneur scheme), but still require parliamentary approval.

Eligibility criteria

When deciding on Innovator visa vs Tier 1 Investor Visa certain requirements have to be met in order to start the application process. Both categories have a very detailed set of rules which will need to be fully explored before an application is made.

TB test if applying from outside the EU.
Criminal record certificates.

Innovator visa

£50,000 funds available in a bank account
- Must be endorsed by trusted UK organisations such as business accelerators, seed competitions and government agencies, as well as higher education providers.
- Must have regular contact with those endorsing bodies.
- Viable business plan.
- Proof of experience and qualification of the main applicant crucial to running a business.
- Proof of funds to support yourself and your family.
- Obligated to employ a minimum of 2 people.
- TB test if applying from outside the EU.
- It is compulsory to have an upper intermediate (B2) level of English (equivalent to IELTS for UKVI 6.0)
- Criminal record certificates.
- Estimated application time frame 1-2month.

Tier 1 (Investor)

£2 M funds available in a bank account.
- Demonstrate that £2 million investment funds have been held for at least 2 years; or, provide evidence of the source of those funds.
- Open a UK investment account for visa investments.
- No English proficiency required.
- The bank must carry out all required due diligence checks and Know Your Customer enquiries, and confirm that these have been done.
- No requirement to maintain certain level of funds for personal maintenance.

UK tier-1 entrepreneur Visa

UK Tier 1 Entrepreneur Just Got Harder

Anyone contemplating the UK Tier 1 immigrant visa programme for entrepreneurs needs to take careful advice before embarking on such a project. For many years the UK Tier 1 was an easy ticket. Invest £200,000 in a business and gain residency in the UK for at least three years. According the the Independent Migration Advisory Committee a total of 13,746 UK Tier 1 investor visas had been issued since 2008 but only 1,580 active companies had been set up by the process. The committee said it had found “substantial evidence of low quality businesses” set up by such entrepreneurs. Read article in Financial Times.

In 2015 the UK government introduced the “Genuine Entrepreneur Test” which has made it far more difficult for investors to meet the criteria of the programme. In a bid to reduce fraudulent applicants a business plan was made compulsory for all investors. Applications are studied in detail by immigration officers and investors need to demonstrate their ability to start a business in the UK and provide evidence of source of funds. The rejection rate for applications recently was around 70%. For some time now immigration has been a hot topic for the government and was the single key issue that led to the recent referendum on the UK leaving the EU. The recent case of the Canadian family who entered the UK on a Tier 1 investor visa only to have their renewal refused this year is further evidence of a tightening of the rules by the British government.

If the failure rate was 70% before this point then it is only likely to rise further after the historic UK vote on 23 June 2016 to leave the EU. While it is still possible to apply for the programme applicants risk losing substantial fees to lawyers and advisors who typically charge a £15,000 non-refundable fee to submit an application that has little chance of success. Contrast this with the golden visa programmes elsewhere in Europe where a straightforward investment in real estate is guaranteed to gain a residency visa with 100% success.

It is clear the UK Tier 1 needs a complete overhaul and that the UK government currently has no appetite for immigration in any form. Wealthy investors are being deterred from UK immigration and this is unlikely to change for some years until the UK has finally left the EU and formulated a coherent investor immigration policy.

UK Residency by Investment post Brexit
June 28th, 2016 • Immigration, Investor Visa, Residency • Comments Off on UK Residency by Investment post Brexit
UK votes to leave the EUBrexit Vote. On the 23 June 2016 the UK electorate voted to leave the EU. So how does this affect immigration investment programmes in Europe that can lead to residency in the United Kingdom ?

Free Movement
One of the key principles of the European Union is the free movement of people. And that is the key question that concerns us when it comes to residency or citizenship by investment in any of the other EU countries. All EU members have to abide by this. In addition other countries gaining access to the single market such as Norway are also required to comply.
Until Article 50 is invoked and for the two year period afterwards then the UK remains part of the EU. This means that for the next two years, nothing will change. Any EU citizen can live in the UK or anywhere else in the EU.

Post EU Exit
For those EU nationals already living in the UK at the time of the UK leaving the EU (2018 possibly 2019) we suspect the chances of being allowed to remain are very high.
There are 3 million EU nationals living in the UK currently and 1 million UK nationals living elsewhere in the European Union. We expect an undignified 3 for 1 swap across the English Channel is unlikely. We also believe that there will be no distinction between those who entered post referendum or even post Article 50.
The reason being that such residents entered the UK completely legally under rules and laws at the time. Not only would it be difficult for a government to send back or “deport” such residents we expect it would not be in the government’s interests to enter into any political row with it’s European neighbours.

UK Residency
Our advice to anyone seeking UK residency through investment in the EU is to act now. Gaining residency in the UK directly through investment under the Tier 1 programme is virtually impossible in the current climate. Residency through a EU passport, as explained above, is the only viable option and one that is likely to remain an option for the next two years. The only countries through which an EU passport can be gained by investment within this timescale are Malta and Cyprus.
The earlier such investment is made, the earlier UK residency can be undertaken and the more likely it is that such residency will not be affected upon the UK leaving the EU.

UK Tier 1 Entrepreneur Rules & Guidelines

What is Tier 1 Entrepreneur?

1. Overview

You can apply for a Tier 1 (Entrepreneur) visa if:

you want to set up or run a business in the UK

you’re from outside the European Economic Area (EEA) and Switzerland.
you meet the other eligibility requirements

You must have access to at least £50,000 investment funds to apply.

2. Who is this for

The United Kingdom's Tier 1 visa immigration scheme is part of the five-tier points based visa system for immigration to the UK. Tier 1 visas are for eligible entrepreneurs, investors, and for the very small number of people who can come under the 'Exceptional Talent' visa category. The various Tier 1 visa categories replaced similar immigration schemes in early 2008.

Guidelines for Assessment

1. Eligibility

You must have access to at least £50,000 investment funds to apply for a Tier 1 (Entrepreneur) visa.

Your funds must be:

held in 1 or more regulated financial institutions
free to spend (‘disposable’) on business in the UK

There are different eligibility requirements depending on whether you have access to £50,000 or to £200,000.

You must also:

meet the English language requirement
be able to support yourself during your stay
score 95 points - check your points score
be at least 16 years old

Read more about the points-based system in the full guidance on the Tier 1 (Entrepreneur) visa.

2. Sharing investment funds

You can form an ‘entrepreneurial team’ with one other Tier 1 (Entrepreneur) applicant and share the same investment funds.

You and your team member must meet all the application requirements and:

not use the same funds on another application with a different entrepreneurial team
provide all the documents needed for evidence of the funds with your own applications

3. Knowledge of English

You may need to prove your knowledge of the English language when you apply.

You can prove your knowledge of English by either:

passing an approved English language test with at least CEFR level B1 in reading, writing, speaking and listening
having an academic qualification that was taught in English and is recognised by UK NARIC as being equivalent to a UK bachelors degree

You may be able to meet the English language requirement in other ways. Check the full visa guidance for detailed information.

4. Access to £50,000 investment funds

You can apply if you have access to £50,000 in investment funds and meet the conditions of one of the following categories.

You can also apply if you’ve invested £50,000 in a business that you’ve set up while in the UK on a different visa. You must have invested the funds less than 12 months before you apply.

The funding sources you’re eligible to apply with depend on the visa you have.

Apply as a former Tier 1 (Graduate Entrepreneur)

You can apply if you meet both the following requirements:

you’re applying to change (switch) your visa (‘leave to remain’)
you have or were last granted a visa or leave to enter the UK as a Tier 1 (Graduate Entrepreneur)

Apply with an approved funding source (excluding former post-study workers or students)

You can apply if your investment funds come from one or more of the following:

a venture capital firm registered with the Financial Conduct Authority (FCA)
a UK entrepreneurial seed funding competition endorsed by UKTI
a UK government department making funds available for the purpose of setting up or expanding a UK business

Your investment funds can’t include:

your own money
money from any other third parties

Apply as a former Tier 1 (Post-study worker)

You can apply if you:

are applying to change (switch) your visa (‘leave to remain’)
have or were last granted a visa or leave to enter the UK as a Tier 1 (Post-study worker)
have registered as a director of a business or as self-employed in the 3 months before you apply
are working in a job on the list of occupations at the National Qualifications Framework level 4 and above

You must have been involved in running one or more UK businesses (eg you’re listed as a company director) before 11 July 2014 to be eligible to apply with your own funds or funds from a venture capital firm.

Otherwise you can only apply with funding from a UK entrepreneurial seed funding competition endorsed by UK Trade and Investment (UKTI) or a UK government department.

Apply as a former student

You may be able to apply for a Tier 1 (Entrepreneur) visa if you’re already in the UK and you’re:

a Tier 4 visa holder
a student nurse
studying, writing up a thesis or re-sitting an exam
a postgraduate doctor or dentist
an overseas qualified nurse or midwife
a student sabbatical officer

You must have access to £50,000 investment funds from one or more of the following:

a UK entrepreneurial seed funding competition endorsed by UKTI
a UK government department making funds available for the purpose of setting up or expanding a UK business

Your investment funds can’t include:

your own money
money from any other third parties
money from a UK venture capital firm

Students with financial sponsorship

If your course fees and living costs have been paid for by a government or international scholarship agency, you must get written consent from them to re-enter or remain in the UK without any conditions.

5. Access to £200,000 investment funds

You can apply for a Tier 1 (Entrepreneur) if you have access to £200,000 in investment funds and you can prove that the money is either:

your own

made available to you by other people (‘third parties’) - eg a husband, wife, partner or investor

in a joint account with your spouse or partner but only if they aren’t applying for a Tier 1 (Entrepreneur) visa

You can also apply if you’ve invested £200,000 in a business that you’ve set up while in the UK on a different visa. You must have invested the funds less than 12 months before you apply.

If you’re in the UK on a Tier 1 (Post-study worker) visa or as a student, you must follow the rules for applying with £50,000 funding.

Documents you must provide

When you apply you’ll need to provide:

a current passport or other valid travel identification
a passport size colour photograph
evidence of the investment funds available to you
evidence that you can support yourself during your stay
proof that you meet the English language requirement
your tuberculosis test results if you’re from a country where you have to take the test

You’ll need to have a blank page in your passport on which to put the visa.

You’ll need to provide a certified translation of any documents that aren’t in English or Welsh.

Read the guide for a list of documents you can provide.

You may need to provide additional documents depending on your circumstances.

Evidence of investment funds

You must provide the following evidence to show you have access to the appropriate investment funds:

an official letter from each financial institution holding the funds
for money held in the UK only, a recent personal bank or building society statement from the UK financial institution holding the funds, which confirms the amount of money available to you or your entrepreneurial team
for money provided by a venture capital firm, seed funding competition or UK government department, a recent letter from an accountant confirming the amount of money made available to you or your business

Funding from a third party

You must also provide the following evidence if any third parties have contributed funds toward your application:

confirmation they’ve made the money available for you to invest in a UK business
a letter from a legal representative (independent from those providing funds) confirming the signatures on the declaration are valid

Evidence that you can support yourself

You must prove that you have enough personal savings to support yourself while you’re in the UK.

How you prove this depends on where you’re making your application from:

outside the UK - you’ll need £3,310
in the UK - you’ll need £945

Your personal savings must have been in your bank account for 90 consecutive days before you apply.

You can’t use either of the following to support yourself:

money from your investment funds
money earned while working in the UK illegally

Extend your visa

You may be able to extend your Tier 1 (Entrepreneur) visa.

You should apply before your current visa expires.

You can apply to extend your visa if you:

meet the eligibility requirements
registered as a director or as self-employed no more than 6 months after the date you were given permission to stay in the UK under a Tier 1 (Entrepreneur) visa
can prove you’ve been self-employed or working as a director of a business 3 months before you apply
created at least 2 full time jobs that have existed for at least 12 months

You must have invested into 1 or more UK businesses either:

£200,000 in cash
£50,000 in cash if your initial application was based on having funds from an approved funding source

You must be in the UK to extend your visa.

You should include any dependants who are on your current visa on your application to extend - including children who have turned 18 during your stay.

Family members

Your family members (‘dependants’) can come with you when you come to the UK on this visa. Your family members must have a visa if they’re from outside the European Economic Area (EEA) or Switzerland.

A ‘dependant’ is any of the following:

your partner
your child under 18
your child over 18 if they’re currently in the UK as a dependant

Read the guidance on dependant applications before you apply.

Savings

You must show that your dependants can be supported while they’re in the UK.

Each dependant must have a certain amount of money available to them - this is in addition to the £945 you must have to support yourself.

The amount depends on your circumstances. You must have £1,890 for each dependant if you’re applying from outside the UK or have been in the UK for less than 12 months. If you’ve been in the UK for more than 12 months, you must have £630 for each dependant.

You must have proof you have the money, and that it’s been in your bank account or your dependant’s bank account for at least 90 days before you or they apply.

Example You must have £4,725 if you want to bring your partner and 1 child with you to the UK (£945 to support yourself plus £1,890 for your partner and £1,890 for your child).

Dependants applying outside the UK

Your family members must apply online.

They’ll need to have their fingerprints and photograph (known as ‘biometric information’) taken at a visa application centre as part of their application.

They may be able to get their visa faster or other services depending on what country they’re in - check with the visa application centre.

Dependants applying in the UK

Your dependants can apply to extend or switch their visas to stay with you if they’re already in the UK. They should apply using thedependant application form.

It’s best to send your dependants’ application at the same time as yours but they can apply at a later date by post or in person at apremium service centre.

Members of your family can’t apply in the UK as your dependant if they hold a visitor visa.

Children born while you’re in the UK

If you have children while you’re in the UK, you can apply for permission for them to stay.

You must do this if you want to travel in and out of the UK with your child.

How to extend your visa

You should read the full guidance on the Tier 1 (Entrepreneur) visa before you apply.

Download the form and apply by post - the address is on the form.

How long it takes

A decision will be made on your application within 8 weeks.

You’ll be contacted if your application is complex and will take longer, eg:

if your supporting documents need to be verified
if you need to attend an interview
because of your personal circumstances (for example if you have a criminal conviction)

Once you’ve applied you can stay in the UK until you’ve been given a decision, as long as you applied before your last visa expired.

What you can and can’t do

You can:

set up or take over the running of 1 business or more
work for your business, including being self-employed, but you should check your work meets the conditions of being self-employed
bring family members with you

You can’t:

do any work outside your business, e.g. work where you’re employed by another business
get public funds

BREXIT – 80% RISE IN UK INVESTOR VISA APPLICANTS

The first set of figures released by the UK Government, after the Brexit vote, shows a significant increase in the number of new applicants for the UK Tier 1 (Investor) visa to 72 main applicants with 133 dependents. This is an increase of 80% from the previous quarter of 40 main applicants.

Breaking down into the country of nationality for the main applicants, this remains constant with historical trends as Chinese nationals accounted for 33% of the main applicants and when incorporating Hong Kong we near 40%. Russians still dominate; accounting for 20% of the applicants as it has, historically speaking.

Historically the amount of UK Investor Visa applicants varied significantly. The peak was seen in Q4 2014 with 471 visas issued in this category. On the 6th of November 2014 the minimum investment was raised to £2m prompting a rush of applicants before the deadline. Since the increase there has been a consistent average of circa 45 per quarter.

The UK and especially London has always been a destination of choice. Attracting migrants because of all it has to offer in the areas of education, finance, rule of law, and quality of life to name but a few.

What are the reasons for the sudden increase of Investor Visa Applicants? Brexit!

Brexit Sale – In the investment community we call it a Brexit Sale, whereby the value of the Pound after the vote has fallen by on average 20% against major currencies. Specifically against the Chinese Yuan we have seen a decline of 11% during Q3 16, and a 15% fall against the Russian Ruble during the same period. Foreign Direct Investment into the UK has increased on all fronts including in the corporate sector where M&A activity has reached record levels with some high profile acquisitions of well established brands being snapped up.

EU migration – The key argument in the Brexit debate was to be able to control EU migration. While we still do not know what will happen to existing Europeans in the UK, it is likely that we will see a control of immigration rights for EU citizens.
Therefore, will we see a shift of applicants ordinarily applying for Maltese or Cypriot citizenship apply for the UK Investor Visa instead? Choice of citizenship is very personal and off course dependent on what one aims to achieve. For those wishing to reside in the UK, given today’s uncertainty a direct application seems to be the preferred route.
Seems that the current number of applicants may be the new norm, or even the base. We are already seeing an increase of applicants from Iranians and Americans thanks to the Trump effect. (Author: Farzin Yazdi)