Perspectives

GES NewsFlash

United Kingdom–Immigration Update: Changes to Immigration Rules Affecting Tier 1 Migrants

18 March 2015

Overview

The UK government published a statement of changes to the immigration rules. Included in the statement are consolidations, clarifications, and changes to the rules for visitors, Tier 1, Tier 2, and Tier 5. This newsflash focuses on the changes affecting the Tier 1 (Investor) and Tier 1 (Entrepreneur) categories.

The majority of the changes will take effect from 6 April 2015.

Changes

Tier 1 (Investor)

A new requirement is being introduced to require Tier 1 (Investor) applicants to open a UK regulated investment account before making an initial application for entry clearance or leave to remain. This will apply to prospective Tier 1 (Investor) applicants who do not already hold their investment funds in the United Kingdom.

Other changes are:

  • Increasing the minimum age of Tier 1 (Investor) applicants from 16 to 18.
  • Clarification on the requirement for applicants to maintain their investments. The changes will mean applicants no longer need to invest additional capital if they sell part of their investments at a loss, but will be required to maintain all of their capital in their investment portfolio. Buying and selling of investments is permitted, provided that the Tier 1 (Investor) applicant does not withdraw any capital from their investment portfolio.
  • Changes to the explanation regarding restrictions on investing in companies principally concerned with property investment, bringing the definition in line with that provided in the Tier 1 (Entrepreneur) rules.

Tier 1 (Investor) visa eligibility requirements remain the same as introduced on 6 November 2014 – applicants must have at least £2,000,000 investment funds and invest the full £2,000,000 amount within three months in UK government bonds, share capital, or loan capital in active and trading UK-registered companies. 

Tier 1 (Entrepreneur)

The “genuine entrepreneur” test is being extended to applications for extension of stay and indefinite leave to remain, and restrictions are being introduced on the ability of Tier 1 (General) migrants to switch into the Tier 1 (Entrepreneur) category. Tier 1 (General) migrants will not be able to switch into the Tier 1 (Entrepreneur) category unless they have already established a UK business prior to 6 April 2015 – or have funding from a government department or seed funding competition.

Other changes are:

  • Applicants must provide evidence of source of funds if they have not held the funds for at least 90 days prior to their application for a Tier 1 (Entrepreneur) visa.
  • It will now be a mandatory requirement for all applicants to submit a business plan with their application.
    Full details of the clarifications made can be found in the statement of changes.

NHS surcharge introduction

The UK government previously announced that they intend to introduce a surcharge for migrants using the NHS. It is anticipated that the planned NHS surcharge will be implemented from 6th April 2015 as follows:

  • The NHS surcharge is £200 per person, per year and will be applicable to Tier 1 Investors and Tier 1 Entrepreneurs (as their visas will be issued for more than six months). It will be paid up front for the duration of the visa. For example, for a family of four applying for visas in the Tier 1 Investor category, where initial visas are granted for three years, the health care surcharge payable at the time of application will be £2,400.
  • The fee will also be applicable when extending leave to remain inside the United Kingdom.

Deloitte's View

The requirement for Investor applicants to open a UK-regulated investment account before making their visa application represents a significant change in approach and will require closer collaboration between Investors, their advisers, and their financial institutions to ensure the requirements can be satisfied. Investors may be hesitant about the need to open a UK account before their visa is issued; however, this requirement should eliminate the possibility of an investor obtaining their visa and failing to meet the three-month deadline to invest their funds due to delays with the banking due diligence process.

The increase to the minimum age for Investors from 16 to 18 should alleviate confusion from potential applicants. It would not normally be possible for a minor to be in control of their own investment funds, and therefore applicants under the age of 18 may not currently be able to satisfy the Tier 1 (Investor) visa criteria.

Tier 1 (General) migrants should already be aware that their immigration category is closing for extension applications from 6 April 2015 – and the changes announced to the Tier 1 (Entrepreneur) category will close off one potential avenue for Tier 1 (General) migrants wishing to switch their status in the future. Any Tier 1 (General) migrants that wish to switch to the Tier 1 (Entrepreneur) category without first needing to establish a UK business will need to apply prior to 6 April 2015 – although the “genuine entrepreneur” test may also affect these applications.

The widening of the genuineness test and mandatory requirement to provide a business plan is an indication that the Home Office still considers the Tier 1 (Entrepreneur) category as open to potential abuse, and applicants are encouraged to present thorough and substantial evidence of their business acumen when making their applications.

If introduced, the NHS surcharge comes as no surprise and reflects the expected fees following the Department of Health’s NHS Visitor and Migrant cost recovery plan published in July last year. Investors and entrepreneurs should be aware that the charge cannot be reimbursed should they decide to leave the United Kingdom.

Contacts

If you have any questions concerning the issues in this GES NewsFlash, please contact a GES professional at our Deloitte offices as follows:

Jurga McCluskey
+44 20 7007 7668
jmccluskey@deloitte.co.uk

Tsveta Bogdanova
+44 20 7007 2499
tbogdanova@deloitte.co.uk

Jessica Pattinson
+44 20 7007 8367
jjpattinson@deloitte.co.uk

Anthony Michael
+44 20 7007 4370
anthmichael@deloitte.co.uk

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