UK: Entrepreneur Visas

Last Updated: 8 September 2011
Article by Caroline C.F. Williams

The United Kingdom has a points-based system for foreign nationals who wish to move to the UK. This system is divided into a number of different tiers, the entrepreneur visa is within Tier 1 and is often referred to as Tier 1 (Entrepreneur).

Summary of Changes

Changes came into effect in relation to the Tier 1 (Entrepreneur) visa on 6 April 2011. The main changes can be summarised as follows:-

  • The initial investment of at least £200,000 may be made by an entrepreneurial team of two.
  • Entrepreneurs who are considered to have high potential are now allowed to come to the UK under this category with funding of £50,000 from certain reputable organisations.
  • There is now an additional entry visa category for prospective entrepreneurs, know as Tier 1 (Prospective Entrepreneur). This provides prospective entrepreneurs with the opportunity to visit the UK for up to 6 months in order to secure funding in the UK before applying for the Tier 1 (Entrepreneur) visa.
  • The number of days which an entrepreneur can be absent from the UK in any calendar year while still qualifying for the UK residency condition for settlement doubled from 90 days to 180 days (there is no residency condition for those wishing merely to extend his or her leave to remain).
  • Successful entrepreneurs may be eligible to settle in the UK after 3 years (in contrast to the normal 5 year requirement) if they have created at least 10 full-time jobs or his or her business has generated an income from business activity of at least £ 5 million (if an existing business was taken over or invested into by the entrepreneur, the entrepreneur's services or investment must have generated a net increase of £ 5 million in that business's income).

Until the entrepreneur is granted indefinite leave to remain (or settlement) in the UK, he or she is not allowed to work in the UK other than for the business (or businesses) which he or she has established joined or taken over in pursuance of his or her Tier 1 (Entrepreneur) visa.

In addition, most immigration applicants must also apply for a biometric immigration document (also known as a Biometric Residence Permit). The biometric information is recorded during an appointment with either a designated Post Office or the Home Office Biometric Enrolment Centre.

All applicants must also meet the general requirements of the Immigration Rules (i.e. HM Borders Agency will refuse any application if any of the General Grounds for Refusal of an application are noted such as adverse immigration history, criminal records etc).

Entry Clearance

In order to qualify for the entry visa under the Tier 1 (Entrepreneur) category visa you must satisfy the following 4 conditions :-

  • You must have access to either: (a) at least £200,000 to make a new investment into business in the UK; or (b) at least £50,000 from certain reputable organisations (e.g. registered venture capital firms regulated by the Financial Services Authority, UK entrepreneurial seed funding competitions endorsed by UK Trade & Investment website or one or more UK Government Departments) and such funding should be made available for the purpose of establishing or expanding a UK business.
  • The money must be:
    1. held in regulated financial institutions; and
    2. freely disposable in the UK.
  • You must prove that you have a good knowledge of the English language (either as a national of a majority English speaking country, by passing an English language test or by holding a bachelor's degree or above which was taught in English).
  • In addition to the first condition (above), you must show you (and your dependants, if any) have sufficient funds to support you in the UK for the duration of your visa without any recourse of public funds. This is generally met for those with no dependants, by demonstrating you have at least £2,800 of personal savings held for a consecutive 90 day period before the date of the application.

As with the investor visa, detailed evidence of your ability to qualify for an entry visa will be required (for example bank account statements and statement of funds generally).

An entrepreneurial team of up to two people may share the investment funds detailed in the first condition. The value of the investment may include money made available by third parties if a legally binding declaration is made by such third parties confirming that the money is available to the entrepreneur or entrepreneurial team or the business that they run.

The entry visa will allow you to enter the UK and permits residence in the UK for 3 years and 4 months.

Extension Applications (also known as Leave to Remain)

If you are not eligible to apply for accelerated settlement (see below) after 3 years, you will need to extend your leave to remain in the UK before your visa expires if you intend to stay in the UK for more than 3 years and 4 months. Your eligibility for the extension will depend on the success of your investment in business activity in the UK.

You will have to provide evidence that demonstrates the following requirements have been met:-

  • You have invested at least £200,000 (or £50,000 if funding was received from certain reputable organisations) in cash directly into one or more businesses in the UK
  • Broadly within 6 months of entry into the UK you have registered (as applicable) with one of the following:
    1. H M Revenue & Customs as self-employed;
    2. Companies House a director of a new business; or
    3. Companies House as a director of an existing business.
  • You: (a) are engaged in business activity on the date of your extension application; and (b) demonstrate that within 3 months of the date of the extension application you continue to be registered as a director or with H M Revenue & Customs (as applicable).
  • You must have either:
    1. established a new business (or businesses) that has or have created the equivalent of two new full time jobs for people settled in the UK; or
    2. taken over or invested in an existing business (or businesses) and show that your service or investment has resulted in a net increase in the employment provided by such business (or businesses) for persons settled in the UK by creating the equivalent of two full time jobs. These new jobs must have existed for at least 12 months prior to the extension application.
  • If you have not already done so, you must meet the requirements set out above (for entry clearance) to show you have a good knowledge of the English language.
  • You must continue to show you have sufficient funds to maintain yourself (and any dependants) for the period of this extension visa – 2 years.

No credit is given for the first condition for either of the following:

  • the value of any residential accommodation or investment in any business which is engaged in property development or property management; and
  • investments made by way of director's loan (although this will be taken into consideration if the loan is unsecured and subordinated in favour of third party creditors).

Extensive documentation is required (accounts for the business, bank or building society statements, HM Revenue & Customs tax returns, details for employees, National Insurance contribution statements, HM Revenue & Customs forms such as P11s, P35s, P45s & P46s, wage slips, accountants letter, current appointment reports from Companies House) to prove you have met all of the conditions for the extension of your leave to remain.

If successful, your visa will be extended for a further 2 years.

Indefinite Leave to Remain (also known as Settlement)

You may be eligible to apply for accelerated settlement if you meet certain conditions.

Eligibility to Apply for Settlement after 3 years of Residence in the UK

You can apply for indefinite leave to remain (or settlement) in the UK after having lived in the UK for 3 years as a Tier 1 (Entrepreneur) if you meet the following conditions:

  • a. Your business (or businesses) has or have created at least 10 new full-time jobs in this 3 year period for people who are settled in the UK; or

    b. You have established a new business (or businesses) that has or have had an income from business activity of at least £5 million during this 3 year period; or

    c. You have taken over or invested in an existing business (or businesses) and can show that your service or investment has resulted in a net increase of £5 million in that or those businesses' income from business activity in this 3 year period compared to the 3 year period preceding your service or investment.
  • You are engaged in business activity when you apply for settlement.
  • Throughout the 3 year period you spend less than 180 days in any calendar year outside the UK.
  • In addition a good knowledge of the English language is required as well as passing the life in the UK test (although there are some exceptions).

Detailed evidence is required to prove all of these conditions have been satisfied (similar to that required for the extension applications).

Eligibility to Apply for Settlement after 5 years of Residence in the UK

You can apply for indefinite leave to remain (or settlement) in the UK after having lived in the UK for 5 years if you meet the following conditions (much the same as those for the extension application):

  • You have invested at least £200,000 (or £50,000 if funding was received from certain reputable organisations) in cash directly into one or more businesses in the UK
  • Broadly within 6 months of entry into the UK you have registered (as applicable with one of the following): (a) H M Revenue & Customs as self-employed; (b) Companies House a director of a new business; or (c) Companies House as a director of an existing business.
  • You:
    1. are engaged in business activity on the date of your settlement application; and
    2. demonstrate that within 3 months of the date of the settlement application you continue to be registered as a director or with H M Revenue & Customs (as applicable).
  • During your period of residence in the UK you must have either: (a) established a new business (or businesses) that has or have created the equivalent of two new full time jobs for people settled in the UK; or (b) taken over or invested in an existing business (or businesses) and show that your service or investment has resulted in a net increase in the employment provided by such business (or businesses) for persons settled in the UK by creating the equivalent of two full time jobs. These new jobs must have existed for at least 12 months immediately prior to the settlement application.
  • Throughout the 5 year period you spend less than 180 days in any calendar year outside the UK

British Citizenship (Naturalisation)

Immigration advisers are hopeful that the changes in settlement will be reflected in due course in the naturalisation rules. The hoped-for changes would allow an entrepreneur who has been living in the UK for one year without any time restrictions (ie from the first anniversary of being granted indefinite leave to remain (or settlement), which may only be 4 years after having arrived in the UK) and who intends to continue living in the UK to apply for British citizenship.

A number of countries do not allow their citizens to become citizens of another country. In such cases the grant of British citizenship may trigger the automatic renunciation of his or her original nationality, which may not be desirable.

General

We would be pleased to advise and assist on all aspects of your move to the UK. Our award-winning private client department, one of the largest and best regarded in the UK, is able to advise you on all aspects of a move to the United Kingdom from the optimum way to structure your assets for tax purposes to our "family office" team who can assist with the more practical aspects involved with a move (from locating a suitable home to setting up bank accounts and accounts with utility providers).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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