What is the ‘New’ Investor Route?
Under the new Investor visa, we expect that the Home office will require third parties (with finance knowledge) to vet and verify applicants’ funds in order to provide endorsements for a visa application to be made.
A brief history of the route
Until the 17th February 2022, the UK had an investor visa scheme since 1995. Priti Patel, then Home Secretary, closed the UK Tier 1 (Investor) visa route on the 17th February 2022. The closure was in response to Russia’s invasion of Ukraine.
The investor visa had been subject to significant and stringent changes in 2008, 2015 and 2019. The Tier 1 route required individuals to invest no less than 2 million GBP in qualifying investments. Provided an individual maintained their investment, the route would lead to permanent residence after five years (and in some cases on an sooner depending on the amount invested) and then eventually naturalisation as a British Citizen.
The government’s pledge to reintroduce an Investor visa.
Since the closure of the Investor visa, the Government has pledged to re-introduce an investment-based visa. Initially the new route was due to open in 2022, then September 2023. We now expect the Investor visa to be introduced after the General Election and as part of the new future government’s immigration plan.
As the UK begins to grasp inflation and needs to attract individuals who provide foreign investment into the UK economy, an iteration of the investor visa route would benefit the UK FDI initiatives.
How will it work?
We expect to see the future iteration of the investor visa to have additional requirements which may include:
- The investor to have prior experience of investing in ‘innovative’ businesses.
- The qualifying investment to be into specific types of UK companies.
- A requirement to demonstrate the source of the investment does not derive from passive income or inherited wealth.
- An increase in the minimum level of investment.
- We expect the Home Office will require third parties to vet and verify the applicants’ funds.
- An endorsement process akin to that of the innovator visa.
Compliance
We expect that the Home Office’s intention to have a third party to vet and endorse applicants creates an arms-length approach to an investment-derived immigration category. This would allow the Home office to redirect any adverse media attention in the event of future failings to vet applicants.
Following a review of the investor visa of 6,312 Tier 1 applications to assess whether the route was facilitating abuse of money laundering regulations, potential links to criminality or other risks it was determined that a ‘small minority’ of individuals connected to the Tier 1 visa route were ‘high risk’.
The Economic Crime (Transparency and Enforcement) Act 2022 (see our recent article here) is designed to mitigate the concerns regarding foreign investment in the UK as part of the government’s wider initiative to tackle money laundering. The Act introduces a Register of Overseas Entities to deliver transparency regarding overseas owners of land and leases in the UK.
Conclusion
The economy in the UK, the upcoming general election and wider geo-political issues presents the UK government with an inventive to introduce an investment-derived immigration category to drive foreign direct investment from responsible and vetted investors.
Investment derived migration programmes enable countries to improve their public finances and support economic growth without incurring debt. There is a great deal of pressure on the UK to become more competitive on the global stage; a new UK investor route should be introduced imminently.
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