After suddenly shuttering the UK Tier 1 Investor Visa regime late last year the government has announced a new system, tightening requirements to avoid abuses, while keeping the doors open as Brexit looms.

The UK gave the under-fire world of “golden visas” a shot in the arm today by announcing it is accelerating reforms of the Tier 1 Investor scheme that had been temporarily suspended early last December.
The Home office announced it is “bringing forward reforms to the Tier 1 (Investor) route”. 

“The reformed route will better protect the UK from illegally obtained funds, whilst ensuring that genuine investors have access to a viable visa route. Applicants will be required to prove that they have had control of the required £2 million ($2.62 million) for at least two years, rather than 90 days, or provide evidence of the source of those funds,” the department said in a statement. It has also refashioned a visa aimed at entrepreneurs, called the Startup Route, while another is called the Innovator Route.

The new visa regime will open on 29 March this year – the same day that the UK is due on current timetables to leave the European Union.

When the government shuttered the programme last December, it shocked industry figures who had been concerned about the lack of forewarning. Also, such citizenship/residency-by-investment programmes have been attacked in the EU recently for allegedly facilitating money laundering. Figures in the sector, such as the Investment Migration Forum, have rebutted such claims.

The UK’s scheme has at times been politically controversial, with some opposition figures questioning if the amount of money brought into the UK by such HNW applicants justifies administrative costs, or is fair. (See here for a critique of the market as a whole.)

With the Brexit process under way, the UK government may have decided it needed to re-activate the Tier 1 Investor Visa programme as soon as possible to highlight that the country remains open to entrepreneurs and investors seeking to put money into the country. 

“This is a welcome move from the Home Office, but as always the devil will be in the detail – and the date on which these new visa routes are to be implemented will not go unnoticed,” Philip Barth, head of immigration at Irwin Mitchell Private Wealth said. 

“The Start-up visa route will be open to those starting a business for the first time in the UK, while the Innovator visa route will be for more experienced business people who have funds to invest in their business,” Barth continued. 

The Start-Up Visa route is intended for those starting a business for the first time in the UK. Replacing the existing Tier 1 Graduate Entrepreneur route, the Start-Up visa will be for all people rather than just recent graduates. A key change is that entrepreneurs will have double the amount of time – two years rather than one – to make their business a success before needing to make any more applications.

“The news comes after a botched announcement [December 2018] from the Home Office last year that the Tier 1 Investor visa route would be suspended pending reform, only for the government to backtrack on these proposals a day later,” Irwin Mitchell said in a note.

Other reactions
Rose Carey, Partner at Charles Russell Speechlys and specialist in business immigration for corporate and high net worth clients, welcomed the changes. 

“Investors will now have to show source of wealth for two years rather than the current three months. In reality, investors already have to provide a comprehensive source of wealth evidence to the banks and so this change just means that they will need to provide the information at an earlier stage in the application. UK banks will need to confirm they have conducted know your client and due diligence checks when opening the UK bank account for the investor, but these checks are something the bank has to do anyway as part of its FCA regulation,” she said.  

“The changes to the qualifying investments will be greeted with enthusiasm by most investors. Many would actually prefer to invest in other types of investment than gilts, but the current system does not make this easy. Gilts generate little return for investors, and once fees and charges are taken into account, investors will often be in negative territory,” Carey continued.

“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,” Carey said.