Investment and involvement
Two of the most notable differences are the level of the initial investment and the degree of involvement by the applicant in relation to that investment once they are in the UK. Tier 1 Investor requires a minimum £2 million investment which is largely passive. On the other hand, Tier 1 Entrepreneur requires a lower initial investment of at least £200,000 but a greater degree of involvement. The individual must set up, join or take over a UK based business as a director or self-employed person and be actively involved in the running of the business. If the ultimate goal is to become settled in the UK, they will need to grow the business(es) and employ staff and that often requires more investment into the business further down the line.
For those with the required funds Tier 1 Investor may seem a straightforward option. However, in practice due to fairly narrow rules on how the funds are managed throughout the life of the investment, the choice of investments is generally restricted to government bonds or shares in UK companies producing modest returns. Substantial funds will also be tied up for a period of up to 5 years (reduced to 3 or 2 years for investments of £5 and £10 million respectively) and investors are unable to benefit from capital growth during this period because any bonds or shares sold must be replaced with investments of the same value until the individual has gained permanent status or left the UK. As such Tier 1 Investor visas are no longer as attractive as they used to be when the minimum investment amount was £1 million.
If the investor is willing to accept these restrictions, the Tier 1 Investor visa generally provides more flexibility than the Tier 1 Entrepreneur visa once the individual has moved to the UK and, crucially for many, English language ability is not a requirement for this visa. If the main applicant wishes to apply for Indefinite Leave to Remain, they must spend no more than 180 days per year outside the UK during the qualifying period (5, 3 or 2 years depending on the level of funds invested). However, if the funds are held jointly by spouses, either can become the main applicant. This allows the dependant applicant spouse to spend as much time as needed outside the UK and this is often attractive where one of the spouses needs to travel abroad frequently on business, for example.
Active involvement in a UK business
If the individual is planning to be involved in growing a business in the UK and will be actively involved in that, then the Tier 1 Entrepreneur category allows for their funds to be used to develop that business, allowing for potentially far greater returns than are generally possible under Tier 1 Investor. The applicant must however be able to demonstrate English language ability and must also demonstrate that they are a ‘genuine entrepreneur’ possessing the skills and experience necessary to develop a business in the UK. This therefore rules out the option for either spouse to become the main applicant, unless of course both spouses possess suitable business acumen. The main applicant must spend no more than 180 days outside the UK per year, if Indefinite Leave to Remain is desired.
The application process
In terms of the application processes for Tier 1 Investor vs Tier 1 Entrepreneur, the entrepreneur route requires considerably more documentation to be submitted to the Home Office, including a very detailed business plan. Although the requirements are burdensome and decisions are often highly subjective, with thorough preparation it is possible to submit an application which will stand up to the rigorous scrutiny of the Home Office and be approved. We maintain a 100% success record for both Tier 1 Entrepreneur and Tier 1 Investor applications.
Of course, when deciding on Tier 1 Investor vs Tier 1 Entrepreneur both categories have a very detailed set of rules which will need to be fully explored before an application is made.