Press Release: Major changes to the Tier 1 (Investor) route – 28th February 2014

Press Release: Major changes to the Tier 1 (Investor) route – 28th February 2014

Major changes to the Tier 1 (Investor) route

28th February 2014

 

The Migration Advisory Committee (MAC) advises the UK Government on migration issues. MAC composes of economists and migration experts. A lot of their recommendations become actual law. For example, MAC recommended the spouse visa minimum income requirement and the Points Based System, all of which were subsequently implemented into the Immigration Rules.

MAC was to consider the following question and to report back to the Government by 7 February 2014:

“At present, the minimum level of investment for the Investor category is £1 million but accelerated settlement status can be achieved by investing either £5 million or £10 million. Migrants may use money loaned to them by UK banks when making their investment. The MAC is asked to consider whether the investment thresholds are appropriate to deliver significant economic benefits for the UK, in particular the minimum £1m threshold?”

The key findings/recommendations include

  • Increasing the £1 million threshold to £2 million. This is because that £1 million investment figure has remained the same since 1994 and has not increased in line with inflation.
  • Broaden the range of investments that investors can invest in whilst restricting or removing the ability to invest in gilts/bonds. The UK are currently selling £300 million of gilts every day and with only 500 Tier 1 investor visas being granted every year, this gilt investment does not make much of a difference. Furthermore, most investors have their £1 million returned to them after obtaining Indefinite Leave to Remain (ILR) and the effect is the £1 million becomes a loan to the UK government rather than it being a substantial investment into the UK economy.
  • The requirement to “top-up” investment funds where the market value has dropped below £750,000 be removed, so as to incentivise wider investment activity.
  • The provision, permitting the investment funds to be sourced by way of a loan from a registered UK financial institution, should be removed as it adds little to the UK economy. This is because the funds are simply transferred from UK financial institutions to the Government via the investor.
  • Under the present law, investors can obtain Indefinite Leave to Remain (ILR) after 3 years if they invest £5 million or after 2 years if they invest £10 million. However, not many investor are using this method because their dependents are still required to reside in the UK for 5 years before being able to apply for ILR. MAC has proposed a different accelerated route which they call the “Premium Route”. Under the Premium Route, there are 100 visas on auction with the minimum reserve price being £2.5 million. This will include an investment of £2 million by the applicant plus a gift of £500,000 donated to the UK Government to be applied to a fund for specific good causes. Any excess above the reserve price would also be put into the “good causes fund”. “Good causes fund” include not-for-profit societies that support the UK’s education, culture and healthcare sectors.  Furthermore, with the Premium Route, the applicant needs only be resident in the UK for a period of 90 days per annum compared to currently 185 days.

Therefore, in a nutshell, MAC recommened that (i) the Tier 1 Investor visas be changed so that a minimum of £2 million is required for the investment; and (ii) a new Premium Route visa be introduced so that investment visas are auctioned to the highest bidder, with the reserve price set at £2.5 million. This could be implemented into UK law by April 2014. The following table provides a summary of the current Tier 1 Investor route together with the proposed revisions.

Summary of current Tier 1 (Investor) route requirements and our proposed revisions
Investment thresholds Settlement qualification period Residential requirements (minimum per annum) Investment restricted to UK Government gilts or loan or share capital in UK registered companies (Y/N) Investment required to hold value (topping up) (Y/N)
Current Tier 1 (Investor) route:
£1 million 5 years 185 days Y Y
£5 million 3 years 185 days Y Y
£10 million 2 years 185 days Y Y
Our proposed Tier 1 (Investor) route:
£2 million 5 years 185 days N N
Premium route 2 years 90 days N N
Auction (reserve price of £2.5 million)

Dr Alan Ma, Founder and Senior Partner of Maxwell Alves Solicitors, is a recognised leading authority in immigration with extensive experience in dealing with Tier 1 (Investor) visas.  He has been invited by UKTI to participate in discussions with UKBA in providing feedback as to whether its application process for visas meets with the UK Government objectives. Dr Ma appreciates the extensive report and welcomes the above recommendations in order to increase the benefits for the UK from overseas investment.

We consider any clients intending to apply under the current Tier 1 (Investor) route under the current provisions must submit their applications as soon as possible. Although the MAC Report is not a statement of new policy, it is an advisory document whereby the UK Government will be taking these proposed recommendations into consideration. The UK Government is expected to announce changes to the Immigration Rules to come into force in April 2014.

Should you have any questions arising from the MAC report or require further information on the forthcoming changes to the Immigration Rules, please contact us via london@maxwellalves.com In order to help us respond efficiently to all enquiries within 24 hours, please leave your name, contact number and enquiry.