The UK Government has announced new immigration rules to incentivise foreign entrepreneurs to invest in the UK. To encourage more non-European wealth creators to bring business opportunities and growth to the UK, the entrepreneur rules will be relaxed from 6 April 2011.

As these changes are more favourable than the equivalent rules for other countries - including US rules under the "Startup Visa Act" - they have been welcomed by the business world.

  • An entrepreneur can qualify for an Tier 1 Entrepreneur visa if he/she invests £50k or more (down from current £200k minimum) into an existing or new UK business, but only if the seed money comes from a reputable source. A qualifying source of funding will be any of: (a) VC firm regulated by the FSA, (b) UK entrepreneurial seed funding competition endorsed by UKT&I or (c) a UK government department for the purpose of establishing or expanding a UK business. Otherwise a minimum £200k investment will be required, but this can include money from third party contributors, such as investors or family members, provided that the entrepreneur has unrestricted access to the funds.
  • For either the £50k or £200k investment, the funds can be shared between an entrepreneurial team of up to 2 people, and both business partners can qualify for a visa (only one is permitted currently).
  • As is currently the case, the entrepreneur can qualify for settlement (permanent residency) after 5 years - 3 years initially plus 2 years extension, but to extend the migrant must prove (a) the required investment was made, and (b) he/she has created 2 full time equivalent jobs for settled workers in the UK.
  • There will be a fast-track to permanent residency after 3 years (rather than 5) if the entrepreneur creates 10 jobs for settled workers or has achieved an annual turnover of at least £5m for the UK business.After taking feedback from the business community, the government has announced more flexibility for migrants with overseas business interests - they can remain outside the UK for up to 180 days each year (doubled from the current maximum of 90 days) and still qualify for permanent residency, which is great news for mobile entrepreneurs.
  • There will be a new Prospective Entrepreneur visa category, which will allow migrants to come to the UK as a visitor to secure funding and make arrangements for the business, before they switch into the full Entrepreneur visa from inside the UK. This avoids the migrant having to return to their home country to apply for a visa and may mean that an expedited visa decision is available.

There is more good news for growth companies looking to expand by recruiting the brightest and best candidates. Although the Tier 1 General route is closing in the UK shortly, to compensate for the loss the Tier 2 rules will be relaxed from 6 April, making it much easier for businesses to recruit skilled employees from other UK employers (this route has been frozen to many SMEs since last year under interim restrictions). There will also be a total exemption from advertising and the visa cap for the recruitment of any employee on a UK salary of £150k or more. Finally, although the future of Tier 1 Post Study Worker - for recent UK graduates - is uncertain, any non-European migrants on that visa that have worked for an employer for 6 months or more can extend simply into Tier 2 General, which is a welcome change to the current restrictions.

With the unavailability of Tier 1, the government is pushing UK employers to operate Tier 2, which requires the UK business to have a sponsor licence. We recommend all UK employers should consider obtaining a licence, even if one is not required immediately. With the current restrictions in place, immigration planning is crucial to ensure that when an urgent recruitment need is identified, employers have the right framework in place to hire a non-European applicant without unnecessary delay.

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