Immigration for Business

Recommended Changes to Tier 1 (Investor)

The Migration Advisory Committee (MAC), which advises the Government on migration issues has published its long awaited report on the economic benefits of the Tier 1 (Investor) category to the UK economy.

The MAC was asked to consider whether the investment thresholds under the Tier 1 (Investor) route were appropriate to deliver significant economic benefits to the UK economy. It concluded that the current rules should be amended. The MAC recommended the following changes;

  • The investment threshold should be increased from £1m to £2m. The current threshold had not been changed since 1994 and this increase therefore reflects inflation.
  • Relaxation of the restrictions on permissible investment instruments. This would allow wider investment activity and enable investors to make higher risk, higher return investments. This in turn would benefit the UK economy. At present, the preferred investments are government bonds. This is in effect, a loan to the government which must be repaid at a later date and therefore does not assist in reducing the deficit.
  • Removal of the requirement to ‘top up’ investment. Currently, the investor must ensure that the investment value stays above £1m. If it falls below, it must be topped up by the investor, this leads to investors preferring government bonds which are considered more stable than market investments. Removing the requirement would encourage wider investment in the market with investors willing to take more risk without the fear of additional investment if the value declines.
  • Removal of the ability to borrow money for investment. Borrowing from financial institutions does not provide any benefit to the UK economy as the funds are simply transferred from the financial institutions to the government. Banks are also generally unwilling to offer loans for this purpose.
  • New premium route enabling investors to obtain accelerated settlement within 2-3 years. The recommendation is that these premium visas should be limited to 100 per year to be disposed of at sealed bid auctions with a reserve price of £2.5 million. The attraction in this recommended premium route is that the investor only needs to be resident in the UK for 90 days per annum instead of the current 6 months.

The above recommendations are designed to make the UK more attractive to investor migrants whilst at the same time ensuring maximum benefit to the UK economy. The government is currently considering the recommendations and is expected to announce proposed changes shortly with a view to their introduction in April 2014.

The proposed changes will have attractions for some. However, those investors wishing to take advantage of the current rules should consider submitting their applications prior to the introduction of the new rules

A full copy of the report can be viewed here.

For further information, please contact Alex Jakubowski.