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Immigration to the UK by way of investment: latest trends for Investors and Entrepreneurs

By Sadat Sayeed
Posted: 12th April 2018 08:40
Under the UK’s managed migration framework, known as the ‘Points Based System’, there are two categories which provide for non-EU foreign nationals to reside, and eventually settle, in the UK based on investment. They are the Tier 1 (Investor) and Tier 1 (Entrepreneur) categories.
The UK’s immigration system is controlled and administered by the Home Office, the ministerial department responsible for immigration, security and law & order. The UK’s immigration policy is set out in ‘Immigration Rules’ (“the Rules”), which specify the requirements to enter and remain in the UK under various categories. The ‘Points Based System’ can be found in part 6A of the Rules.
Summary of the Investor category

The Rules describe the purpose of the Investor category as follows: “This route is for high net worth individuals making a substantial financial investment to the UK.”
To enter, or remain in, the UK under the Investor category, an applicant must show that they have not less than £2 million of their own money, under their control, held in a regulated financial institution and disposable in the UK. Then within three months of being granted permission to enter (or remain) in the UK as an Investor, the applicant must have invested that £2 million in the UK by way of UK Government bonds, share capital or loan capital in active and trading UK registered companies.
If that investment is maintained for a period of five years (whether for a profit or a loss), then subject to the minimum residence requirement (see below), the applicant will be granted permanent residence in the UK. However, there are faster tracks to permanent residence as an Investor: if £5 million is invested, then it will be granted in three years; if £10 million is invested, then in two years. At the point at which permanent residence is granted, the Investor may then liquidate their investment.
Summary of the Entrepreneur category
The Rules describe the purpose of the Entrepreneur category as follows: “This route is for migrants who wish to establish, join or take over one or more businesses in the UK.” A critical difference between this category and the Investor category is that this route requires the applicant to invest in, and then operate, a UK business.
To enter, or remain in, the UK under the Entrepreneur category, an applicant must show that they have at least £200,000 to invest into one or more UK businesses. To ‘invest’ under this category requires the funds to be invested into a business or businesses which the applicant is running as self-employed or as a director or member of a partnership. Simply buying a business from a previous owner, where the money ultimately goes to that previous owner rather than into the business being purchased, will not constitute an investment for the purpose of this category. The initial application must be supported by a business plan, and may be subjected to the controversial ‘genuine entrepreneur’ test (see below).
If an initial application to enter or remain as an Entrepreneur is granted, the applicant will be granted permission to enter/remain for three years. Upon an application to extend permission as an Entrepreneur, the Home Office must be satisfied that (i) at least £200,000 in cash has been invested into one or more UK businesses, (ii) the applicant has registered as self-employed, or as the director of a UK company, or member of a UK partnership, (iii) the applicant has created at least two new full time jobs for settled workers (i.e. British or European nationals, or non-EU national with permanent residence) – those jobs have to have existed for at least 12 months, and (iv) the applicant again passes the ‘genuine entrepreneur’ test. If the extension is granted, the applicant will be permitted to remain in the UK for a further two years.
After five years of residence in the UK as an Entrepreneur, the applicant will be eligible for permanent residence (again subject to the minimum residence requirement), however, before that is granted the Home Office again have to be satisfied of the same matters as on the previous extension application. There exists a faster track to permanent residence as an Entrepreneur: if within the first three years of permission the applicant creates at least 10 new full time jobs for settled workers, then they will be granted permanent residence at the end of that three year period.
Common residence requirement for permanent residence as an Investor or Entrepreneur
Applications for permanent residence, either as an Investor or Entrepreneur, have a common residence requirement: theapplicant must not have been absent from the UK for more than 180 days during any 12 month period during the requisite qualifying period for permanent residence. This is quite a generous allowance, and allows Investors and Entrepreneurs significant flexibility in terms of travelling. Further, both categories allow for dependant partners and children to reside in the UK, with permanent residence also available to these family members after the requisite qualifying period (corresponding to the period for the principal applicant) has been met.
Recent trends in the Investor category
The most significant recent changes to the Investor category all came into force on 6 November 2014. Before then, the entry level investment was £1 million and there were significant numbers who took advantage of this relatively attainable figure. Also, before that date, applicants could source the £1 million investment sum from a loan (secured against at least £2 million of assets). However, following a recommendation from the Migration Advisory Committee (the independent body that advises the government on migration issues), the minimum investment sum was raised to £2 million and the ability to invest borrowed monies was removed.
At the same time, provisions were inserted into the Rules which empower Home Office officials to reject Investor applications if they have reasonable grounds to believe that any monies relied on have been acquired by means of conduct which is unlawful in the UK (or would constitute unlawful conduct if it occurred in the UK), or where the monies have been made available to the applicant by another party in respect of whom their character, conduct or associations are such that approval of the application would not be conducive to the public good.
In terms of the number of Investor applications approved by the Home Office, in 2013 there were 565; in 2014 there were 1172 (the spike in numbers reflecting the rush to make applications under the £1 million route, before the investment threshold was doubled towards the end of the year); in 2015 there were 192; in 2016 there were 215; and in 2017 there were 355. While the most recent figures have not yet reached pre-6 November 2014 levels, they do show a steady increase in the number of Investor applications. (These figures provided by the Office for National Statistics).
In terms of the country of origin of successful Investor applicants, in 2017, by far the greatest number were Chinese nationals, with 125; then 48 from Russia; 24 from Turkey; 21 from Hong Kong; 18 from the USA; and 15 from Canada.
Despite the doubling of the minimum investment level to £2 million in late 2014, the Investor route remains a popular and relatively straightforward one.
Recent trends in the Entrepreneur category

The investment level for permission to enter or remain in the UK as an Entrepreneur makes this a relatively attractive route for entrepreneurial people from around the world. An investment of £200,000 is not out of reach for large numbers of Entrepreneurs, many of whom originate from developing economies.
However, it is the ‘genuine entrepreneur’ test which makes success in applications under this route more uncertain than as an Investor. The test was introduced 31 January 2013 by the then Immigration Minister, Mark Harper, to combat supposed abuse of the route by suspicious applicants, against the backdrop of evidence that funds to prove eligibility were being re-cycled amongst different applicants and that artificial businesses were being created.
At the initial application stage, the Home Office official determining an Entrepreneur application and applying the test, must be satisfied that the applicant (i) intends and is able to establish, take over or become a director of one or more businesses in the UK within the next six months, and (ii) genuinely intends to invest the money in the business or businesses. The official is required to conduct a holistic assessment of the application, with a particular focus on the “the viability and credibility of the applicant’s business plans and market research into their chosen business sector”.
Unfortunately, the evaluative nature of this test means that an undesirable degree of subjectivity has crept into Home Office decision making. There is no express or implied requirement in the Entrepreneur Rules that the proposed business must succeed. Indeed, it is natural that a significant proportion of small businesses will fail – however, that does not mean the person running that business is not a ‘genuine entrepreneur’. Regrettably, some Home Officials have taken it upon themselves to act as quasi-bank managers, assessing whether in their (unqualified) view, a proposed business by an aspiring Entrepreneur is likely to succeed. That is not the purpose of the ‘genuine entrepreneur’ test, nor is it the role of the Home Office decision maker.
Applicants who are already well established in a particular line of business and who are looking to expand into the UK, are less likely to be exposed to this sort of analysis and capricious decision making. However, applicants who are looking to simultaneously move to the UK and set up a new business without any previous experience in that particular area of business (in many ways the true essence of an ‘Entrepreneur’), may find their applications subjected to greater scrutiny under this test.
For that reason, aspiring Entrepreneur applicants should seek appropriate and competent business and legal advice before they apply. The former is important for the compilation of a credible and water tight business plan, which can withstand scrutiny. The latter is critical to ensure that the application is framed in a way in which shows that the Home Office should not be concerned about the genuineness of the applicant’s intentions, but also to ensure that if the Home Office does conduct a full-blown ‘genuine entrepreneur’ assessment, there is appropriate legal oversight of the decision-making process.
Sadat Sayeed is a UK-based barrister, specialising in advice, representation and advocacy in all areas of immigration, asylum, nationality, deportation, detention, national security, EU free movement and human rights law. He has practiced throughout his 17 year career at the Bar from Garden Court Chambers in London, the leading set of chambers in the UK for immigration work. He is ranked as a leading barrister in the field of immigration in both the Chambers & Partners and Legal 500 directories, and is a contributor to the leading English law practitioners’ text, Macdonald’s Immigration Law and Practice. He has particular expertise in the law, policy and practice relating to Tier 1 (Investor) and (Entrepreneur) Migrants.
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