As we reported in October, the Government has asked the Migration Advisory Committee (“the MAC”) to review the Tier 1 (Investor) category.
We have since held in-depth discussions with the MAC on behalf of our investor clients and have learned more about the significance of the review that is being undertaken.
We presently understand there will be significant changes to the Tier 1 (Investor) category in April 2014, although this could be pushed back. This is because there are concerns that whilst the category in its current form benefits those individuals who apply under it, it does not of itself enhance the UK economy.
MAC’s current thinking
In our discussions members of the MAC highlighted the following:
- Individuals who enter the UK under Tier 1 (Investor) must invest a minimum of £750,000 in UK Government bonds or share capital or loan capital in UK registered and trading companies. Many invest in bonds and withdraw the investment from the UK once settlement has been secured.
- According to Home Office statistics, only 530 main applicant and 1038 dependant Tier 1 (Investor) visas were issued between June 2012 and June 2013.
- Because the number of individuals using this category is fairly small (compared, for instance, to the 10,749 visas issued under Tier 2 during the same period of time), the overall direct financial benefit to the UK is negligible.
- The fact that such individuals may purchase residential property in the UK is not something they intend to consider as a positive factor.
We explained to the MAC the numerous benefits investors often bring to the UK including:
- They often invest significant amounts in businesses and/or commercial property.
- Their children often attend private schools in the UK.
- Many are ultra high net worth individuals and employ UK resident workers in their households and spend significant sums on high-end goods and services in the UK.
- Such individuals are often involved with cultural and charitable causes, making significant donations.
It is also extremely important that the UK has an investor category in order to foster international relations and compete on the world stage for significant inward investment opportunities.
Possible future options
Many of the points we raised were noted by the MAC and they are becoming increasingly aware that the indirect benefits to the UK of this category may be extremely significant.
However, it remains likely that the new Tier 1 (Investor) category will be fundamentally different to the current scheme and ideas being actively considered include:
- Requiring applicants to make a gift to the UK.
- Investment in charitable causes or local community projects.
- Specified Private Equity and Venture Capital models.
- Expedited routes to settlement and citizenship.
Action for prospective investors
Those who are thinking of making an application under the Tier 1 (Investor) category in the near future should consider these developments carefully.
Individuals who are keen to apply for Tier 1 (Investor) status under the current structure and who specifically wish to invest £750,000 in UK Government bonds are advised to consider filing their application in the near future.
We will update our website when further details emerge and we urge you to respond to the MAC’s call for information about this category. If you require further information about the current criteria for Tier 1 (Investor), please contact us.