UK "Investment Visa" changes - Changes to the Tier 1 Investor Route
The UK Home Office has announced that, with effect from 6 November 2014, all applications for Tier 1 (Investor) Visas to the UK will be subject to an increased minimum financial threshold of £2 million along with other changes summarised below.
In our News Bulletin of 18 March 2014 we reported the Migration Advisory Committee’s (MAC) review of the Economic Impact of the Tier 1 Investor Route, in which the Committee considered the current economic benefits of the existing system. The present changes include some, but not all, of the recommendations from the MAC Report.
The Tier 1 (Investor) Visa was set up to enable wealthy individuals to make a substantial financial investment in the UK in Qualifying Investments to obtain a visa. When the scheme was introduced an applicant was obliged to invest £1 million, of which a Qualifying Investment of at least £750,000 was required in UK government bonds or shares and bonds of UK companies, with the balance in other UK assets, including property or UK bank deposit.
In the event that the investment fell below the £1 million minimum threshold, the investor was obliged to ‘top up’ the investment to maintain the minimum investment. It was also possible to fund the investment by a loan from a UK financial institution.
On the 6 November following changes come into effect:
1. The minimum financial threshold is increased to £2 million. This increase was widely expected and reflects the effect of inflation since the threshold was set in 1994. The increased threshold will only apply to applications made on or after 6 November. Existing visa holders unaffected by the change.
2. The obligation to ‘top up’ the investment should the value of the investment fall below the minimum threshold has been removed. If, however, Qualifying Investments are sold, the investments must be replaced to maintain the minimum investment threshold.
3. The division of the investment funds as summarised above, the 75%/25% Rule, has also been removed.
4. The possibility of funding the investment by a loan from a UK financial institution has also been removed.
Other recommendations proposed in the MAC Report, in particular, changes to the class of qualifying investments to bring a more targeted benefit to the UK, have not materialised, though the Government has indicated that it will have a formal consultation period on this element in the future.
Overall the changes are broadly positive and the removal of the obligation to ‘top up’ investments that have fallen in value should be welcomed.
The Tier 1 Investor scheme remains an attractive option for individuals wishing to live, work and study in the UK with their spouse and minor children and, providing the criteria are met, the investor and his family can apply for permanent UK residence after five years. If larger investments are made of £10 million or £5 million permanent UK residence can be achieved in respectively two or three years.
As we recommended in March, anyone currently considering submitting an application for a Tier 1 Investor Visa may wish to do so before the current minimum investment threshold is increased from the present £1 million.