The UK home office has announced new reforms for tier1 investor and entrepreneur visa schemes. Under the new changes, Government bonds have been removed with more tighter checks.

The Home office announced these reforms to the Tier 1 (Investor) category to protect better against financial crime and ensure investments are of greater benefit to the UK economy.

UK is also replacing Tier1 entrepreneur route by introducing new Start-up and Innovator categories for those coming to the UK to set up a business, replacing the Tier 1 (Graduate Entrepreneur) and Tier 1 (Entrepreneur) categories.

The investment requirement of £200,000 is reduced to £50,000

Here are the important changes

Tier1 Investor

• Government bonds: Government bonds removed for tier1 investors
•  Funds: The  90-day requirement of Funds is being extended to a 2-year requirement, to provide greater assurance of the provenance of applicants’ funds.
•  UK bank account: Applicants are currently required to open a UK bank account for the purpose of making their investment before making a Tier 1 (Investor) application. This requirement 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.
• Intermediaries: Tightened rules for use of intermediary vehicles to make the scheme more transparent. requirement for any intermediary vehicles to be regulated by the Financial Conduct Authority (FCA), and a requirement to provide evidence of the final investment destination and how the funds are transferred there, regardless of how long any chain of intermediary vehicles is
• Companies: Active and trading companies is being strengthened so that there must be stronger evidence that such companies are trading in the UK.
• Price: The  price of the investments means the price the applicant paid for the investments £2m, not the face value
• Investment Pools: New provision is being made to allow investment in pooled investments which also receive funding from a UK or devolved government department or one of its agencies, such as the British Business Bank or the Scottish Investment Bank.
• Checks: Transitional arrangements are being applied to ensure the above changes regarding 2-year source of funds checks, investment in UK government bonds, FCA regulation of intermediary vehicles and the definition of “active and trading” companies do not have an adverse impact on investors who entered the category under the rules in place before 29 March 2019. These transitional arrangements will continue until 5 April 2023 for extension applications and 5 April 2025 for settlement applications.

The initial entry clearance for tier1 investors is issued for 40 months and 24 months for those who have already leave.

Entry clearance will be granted:

(i) for a period of 2 years, to an applicant who has, or has had, leave as a Tier 1 (Investor) Migrant in the 12 months immediately before the date of application, or

(ii) for a period of 3 years and four months, to any other applicant.

Tier1 Entrepreneur

Home office is also replacing Tier1 entrepreneur route by introducing new Start-up and Innovator categories for those coming to the UK to set up a business, replacing the Tier 1 (Graduate Entrepreneur) and Tier 1 (Entrepreneur) categories

Tier 1 (Entrepreneur) applications, the entry clearance grant period for extension applications is being changed to 2 years, 4 months for consistency with leave to remain grants.

The main features of the two new categories 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. The startup route does not lead to settlement.

 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.

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