The New Tier 1 Visa System

Initial review of visa changes

A new statement of changes to the Immigration Rules was published today, 7 March 2019. It is 294 pages long and covers a lot of ground. The main changes are to Tier 1 entrepreneur and investment visas, and to the EU Settlement Scheme. Most of the changes are expected to take effect on or around the default date of Brexit, 29 March 2019, or a week later.

Tier 1 of the Points Based System:

Start-up visa

The Home Secretary announced last June 2018 that there would be a new “start-up” visa for young entrepreneurs. At that point it was not entirely clear whether it would replace the existing Tier 1 (Graduate Entrepreneur) route outright or build on and rebrand it. Today’s statement of changes makes clear that Graduate Entrepreneur route is closed to new applicants as of 6 July 2019.

Tier 1 (Graduate Entrepreneur) applications can therefore continue to be made until 5 July 2019.

The explanatory notes say that the main features of its replacement are as follows:

The Start-up category is an expanded version of the Tier 1 (Graduate Entrepreneur) category. It is for those starting a new business for the first time in the UK. Applicants will not need to be graduates and will not need to have secured any initial funding. Successful applicants will be granted 2 years’ leave (doubled from 1 year) and will be able to progress into the Innovator category to continue developing their businesses in the UK after that time.

Applicants will need to be endorsed by a trusted organisation in the UK, “such as business accelerators, seed competitions and government agencies, as well as higher education providers”.

Part W5 of the new Appendix W contains the specific requirements for a start-up visa, including who can endorse applicants for one, their monitoring responsibilities and the form of an endorsement letter. The letter must contain specified information about “innovation, viability and scalability”. Appendix W makes clear that having a start-up visa “does not lead directly to settlement in the UK”, although the person can switch onto an innovator visa. There are transitional arrangements for those already here on Tier 1 (Graduate Entrepreneur) visas to switch onto the new system.

Innovator visa

Tier 1 (Entrepreneur) is also dead — this time from 29 March 2019. The immigration minister says that the route “has a long tail of low quality projects which contribute little or nothing to the wider UK economy”.

In place of the entrepreneur comes the innovator:

The Innovator category is intended for more experienced businesspeople. As well as an endorsement, applicants will need £50,000 to invest in their business from any legitimate source (reduced from £200,000 for most applicants in the current Tier 1 (Entrepreneur) category). The funding requirement will be waived for those switching from the Start-up category who have made significant achievements against their business plans. The category may lead to settlement in the UK.

The three main endorsement criteria are defined as follows:

• Innovation: the applicant has a genuine, original business plan that meets new or existing market needs and/or creates a competitive advantage.

• Viability: The applicant has the necessary skills, knowledge, experience and market awareness to successfully run the business.

• Scalability: There is evidence of structured planning and of potential for job creation and growth into national and international markets.

Note that these are slightly different to the requirements for a start-up visas, although the three headings are the same. The endorser must also be “reasonably satisfied that the applicant will spend the majority of their working time in the UK on developing business ventures”.

Unlike with the exceptional talent visa route, there is no set list of organisations that can endorse someone for an innovator visa. Endorsing bodies must be able to satisfy the criteria in Part W6.8, though.

Extension applications for Tier 1 (Entrepreneur) migrants will remain open until 5 April 2023, and settlement applications until 5 April 2025.

Investor visa

There are significant changes to the Tier 1 (Investor) route from 29 March 2019.

These include lengthening the period for which funds must be held prior to applying from 90 days to two years. The requirement to open a UK bank account before applying for an investor visa “is being tightened to make explicit that the bank must carry out all required due diligence checks and Know Your Customer enquiries and confirm that these have been done”.

Applicants will no longer be able to simply buy up UK national debt to qualify as an investor. Purchase of UK government bonds is being excluded as a qualifying investment.

There will be tighter rules on routing investment funds via “intermediary vehicles”, including a requirement that such vehicles be regulated by the Driver and Vehicle Licensing Agency Financial Conduct Authority. The definition of “active and trading” companies is also being tightened so that they:

(i) are registered with Companies House in the UK; (ii) are registered with HM Revenue and Customs for corporation tax and pay as you earn (PAYE); (iii) have accounts and a UK business bank account, both showing regular trading of its own goods or services; (iv) have at least two UK-based employees who are not its directors.

Transitional arrangements for current investor visa holders will be in place until 5 April 2023 for extension applications and 5 April 2025 for settlement applications.

Invest and Consult has summarised a simple comparison between the new visas and UK T1 visas.  Please contact us if you are interested in obtaining a copy.