UK: Investor Visas – The New Rules

Last Updated: 10 February 2015
Article by Rose Carey and Piers Master


In October 2014 the Government enacted legislation to give effect to some of the recommendations of the Migration Advisory Committee which were published in February 2014, the main change being the increase in the minimum threshold for an investor visa applicant from £1 million to £2 million.

Any investors who applied for their initial investor visa prior to 6 November 2014 can continue to benefit from the lower minimum threshold for investment into the UK of £1 million. The remainder of this note will address the new rules which came into effect on 6 November 2014 and will only affect investors who apply on or after this date.

Essentially the ability to obtain the initial Tier 1 (Investor) visa is simple. You need to demonstrate to the Home Office that you have at least £2 million which can be converted into sterling (if necessary) and can be transferred into the UK.

The reality is often a little more complex, especially if the funds have not been held in cash and in a sterling account for at least 3 consecutive months, or the financial institution which holds the funds cannot be persuaded to make all of the statements required.

Entry Clearance as a Tier 1 (Investor) or Application for an Initial Grant of Leave (Switching) into the Tier 1 (Investor) category (the "Initial Visa")

In order to qualify for the Initial Visa under the Tier 1 (Investor) category you must have at least £2 million (or its equivalent in another currency) of your own money in a regulated financial institution (i.e. a bank or building society). You are allowed to use money held by your spouse or civil partner if certain additional documents are provided. The money must be freely disposable in the UK. If the money is not held in sterling, it must be convertible into sterling.

If the £2 million has not been held in cash in a bank account for at least 3 months, formal evidence will be required to evidence the source of these funds.

If granted, an entry clearance visa will allow you to enter and live in the UK for 3 years and 4 months (or for 3 years if you are in the UK switching into this category from another category of visa).

Extension Applications (also known as Leave to Remain)

If you wish to stay in the UK for more than 3 years and 4 months (or 3 years) and you are not yet eligible to apply for indefinite leave to remain (see below), you will need to make an extension application for permission to remain in the UK for a further 2 years.

To apply for an extension, evidence is required to show that within the relevant time (usually within 3 months of arriving in the UK) and until the date of your extension application you have invested at least £2 million in UK Government bonds, share capital or loan capital in permitted active and trading UK registered companies ("Qualifying UK Investment").

Although regular monitoring is no longer required, the values held in the portfolio of Qualifying UK Investments will have to be re-examined (and perhaps the value "topped up") on any sale of assets within the portfolio.

Settlement (also known as Indefinite Leave to Remain)

If certain conditions are met, you may be able to settle in the UK once you have lived in the UK for 2, 3 or 5 years. However, any dependants of the main investor would still have to spend at least 5 years in the UK before they apply to settle.

For all settlement applications the main investor (only) must restrict his or her absences from the UK to less than 180 days per calendar year. The main investor and his or her dependants should meet the Knowledge of Life and English Language requirements (unless exempt).

Eligibility to Apply for Settlement

Depending on the amount of funds invested (and subject to meeting the conditions set out above), you can apply for settlement in the UK after having lived in the UK for 2, 3 or 5 years:

Total investment required
Settlement after 2 years £10 million
Settlement after 3 years £5 million
Settlement after 5 years £2 million

The minimum investment of £2 million must be made within 3 months of arriving in the UK and the required level of investment as outlined above must be maintained for the required period until the application for settlement is made.

Dependants Applications

Spouses, civil partners, same sex partners and unmarried couples may be eligible to join the investor in the UK together with the minor children. Applications made on behalf of minor children are generally only considered if both parents are applying to enter the UK at the same time as the child, or are otherwise entitled to live in the UK.

British Citizenship (Naturalisation)

Once you have been resident in the UK for at least 5 years, it may be possible to apply for British citizenship. The rules provide that to be naturalised as a British citizen an applicant must meet certain requirements, one of which is known as the residential requirement.

There are several conditions within the residential requirement, two of the most important of which provide that:

  • You must have been resident in the UK for at least 5 years leading up to the application, the last year of which you must have held Indefinite Leave to Remain; and
  • You must not have spent more than 450 days outside of the UK during the five year period (or an average of 90 days outside of the UK per year). In practice, slightly longer periods of absence can be permitted.

The effect of these rules means that it will take 5 years for main investors who

made eligible investments of either £5 million or £10 million to be considered for naturalisation and an additional twelve months (6 years in total) for a main investor who made an eligible investment of £2 million to be considered for naturalisation. All dependants would have to wait 6 years in total before they would be eligible to naturalise as British citizens unless married to a British citizen.

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.

Immigration and Tax

In order to obtain settlement in the UK, the main investor must spend less than 180 days outside the UK each year. As such they will become resident in the UK for tax purposes and subject to UK tax.

The UK is still an attractive country in which to be resident for new arrivers as long as they structure their assets in a tax efficient way prior to their arrival. We would therefore strongly advise all prospective investor visa applicants to obtain bespoke tax advice before applying for their visa and arriving in the UK.

Our award-winning private client department, one of the largest and best regarded in the UK, is able to advise you on the optimum way to structure your assets for tax purposes and can assist with the purchase of property in the UK.

Practical Points

The investor and their family can help to ensure there are no difficulties in relation to the various immigration applications as follows:

  • Ensure that all travel records are noted so that the main investor is not in danger of spending more than 180 days outside of the UK in a year (although if naturalisation is the main objective the number of days of absence from the UK is reduced to a maximum of 90 days a year);
  • The identity of the main investor is usually influenced by the residence requirements for settlement. The main investor (alone) has to fulfil the requirement of having less than 180 days of absence from the UK in any calendar year. The main investor should therefore be the person who is most likely to be able to spend at least 180 days in the UK per year;
  • Unmarried or same sex partners, who are not married or have not entered into a civil partnership, need to prove that they have been living together within a committed relationship similar in nature to marriage or civil partnership for at least 2 years. Evidence of cohabitation (such as joint bank statements) should therefore be kept to support any application; and

UK financial institutions have to conduct due diligence on all new clients, which may delay the opening of a suitable account in the UK to hold the UK investments. Early investment in eligible UK investments is therefore encouraged.

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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