New rules set to be introduced at the end of the month to so-called ‘gold-plated’ visas have received a warm welcome from the private client industry, reports Arun Kakar
Global elites looking to enter the UK on a ‘gold-plated’ tier-1 visa will have to demonstrate they have £2 million to invest in UK business for two years, rather than 90 days under the existing system. In new changes announced by the Home Office, HNW applicants can alternatively ‘provide evidence on the source of their funds’.
Applicants will now need to invest the funds into a UK business, with UK government bonds disqualified as an eligible investment. The reforms are set to be implemented on 29 March – the same date as when the UK is set to leave the European Union – as part of the government’s bid to ‘better protect the UK from illegally obtained funds, whilst ensuring that genuine investors have access to a viable visa route’.
Immigration minister Caroline Nokes said: ‘What we will not tolerate is those who seek to abuse our system and that is why I am bringing forward new measures which will make sure that only genuine investors, who intend to support UK businesses, can benefit from our immigration system.’
The move forms part of an ongoing crackdown from the Home Office on money laundering and organised crime coming into the UK. The current iteration of tier-1 visas was launched in 2008 to non-EU HNWs, granting a visa and indefinite leave to remain after five years for those who invested £2 million in the UK. Currently, applicants are required to demonstrate that they have control the funds for 90 days.
The number of applications peaked in 2014, with 1,172 successful applications granted. Some 3,000 have been issued in all. The Home Office suspended the program in December 2018 before u-turning on the move just days later after reported opposition from other government departments.
The government was broadly praised for the move across the private client world. Geoffrey Todd, partner in the private wealth practice at private client firm Boodle Hatfield said: ‘The changes to the investor visa scheme will provide welcome certainty for overseas HNWs. There had been concerns that the scheme would be scrapped, which would have been a shame.’
‘These changes keep the investor visa scheme attractive to the sort of HNW individuals the UK wants to attract, while tightening up the requirements. In my view, we should not be concerned that other European countries with similar schemes have lower thresholds.’
Todd continued: ‘The new two-year rule is a clear improvement, and it won’t be a problem for genuine HNWs. The UK remains a favoured destination for them. The requirement to invest in UK companies, rather than UK government bonds, is also welcome as it is quite a familiar type of investment for HNWs and more directly benefits the UK.’
The Home Office also announced that the start-up and innovator visa is open to those looking to start their first UK business and more experienced businesspeople with £50,000 to invest in their business. The former replaces the tier 1 (Graduate Entrepreneur) route, and the latter is a reduction on the £200,000 required for submission to the initial scheme.
Rose Carey, partner at Charles Russell Speechlys praised the new schemes, claiming that the changes will be welcomed by investors.
Carey explained: ‘The tier 1 Entrepreneur visa has increasingly become very difficult for genuine entrepreneurs to navigate. Convoluted requirements, for example requiring an independent lawyer to verify the signature of the bank official signing a letter to confirm funds in the account, have made it a tricky process. Home Office officials have also previously tried to make viability assessments on businesses with little understanding of that sector.
‘As such, the replacement of the scheme with the new start-up and Innovator categories which require independent assessment and endorsement by experts will be a positive change. Endorsement by independent expert bodies has worked well in other visa categories, for example the tier 1 Exceptional Talent visa, which requires endorsement by an expert body.
‘With Brexit looming and the difficulties this has posed for the economy, encouraging investment from outside the EU is important. Equally, demonstrating that the UK is open for businesses will be a welcome message.’
Philip Barth, head of private wealth at Irwin Mitchell Private Wealth welcomed the move, but sounded a note of caution that ‘the devil is in the detail’, with the timing of the announcement. He added: ‘The Home Office must be careful to avoid placing too much emphasis on innovation to the detriment of traditional, but viable business models, as while the new and exciting businesses are important to the UK remaining a world-class financial centre, so are the “everyday” ventures.’
Arun Kakar writes for Spear’s