Changes to the Immigration Rules including the Tier 1 (Investor) category of the Points Based System were made by the government earlier this month.
The Tier 1 (Investor) category is for high net worth individuals making an investment of at least £2 million in the UK.
Changes are being made to supplement previous changes made in 2014 and 2015, and according to the Home Office, address concerns about the character and conduct of applicants using the route and the sources of their funds.
- Currently applicants must provide evidence that they have held the funds that they will invest in the UK for at least 90 days or, if they have not held them for 90 days, provide evidence of the source of those funds. This 90-day requirement is being extended to a two-year requirement, to provide greater assurance of the provenance of applicants’ funds.
- Applicants are currently required to open a UK bank account for the purpose of making their investment before making a Tier 1 (Investor) application. This requirement is being tightened to make explicit that the bank must carry out all required due diligence checks and Know Your Customer enquiries, and confirm that these have been done. In practice this is something that banks are already doing.
Additional changes are being made to qualifying investments to the UK:
- Investment in UK government bonds is being excluded, to incentivise Tier 1 (Investor) migrants towards other forms of investment which have greater need to attract additional investment funds.
- To increase transparency and demonstrate better where applicants are ultimately investing their funds, rules are being tightened around the use of intermediary vehicles to include a requirement for any intermediary vehicles to be regulated by the Financial Conduct Authority (FCA), and a requirement to provide evidence of the final investment destination and how the funds are transferred there, regardless of how long any chain of intermediary vehicles is.
- The definition of ‘active and trading’ companies is being strengthened so that there must be stronger evidence that such companies are trading in the UK.
- A clarification is being made to confirm that ‘price of the investments’ means the price the applicant paid for the investments, not the face value (which does not in itself demonstrate that an applicant has invested £2 million in the UK, as required by the rules).
- New provision is being made to allow investment in pooled investments which also receive funding from a UK or devolved government department or one of its agencies, such as the British Business Bank or the Scottish Investment Bank. This is because such vehicles will have been assessed as being of benefit to the UK economy by the department or agency providing the funding. The exclusion of other types of pooled investment vehicles remains, as the Home Office cannot be satisfied that the applicant’s funds are being invested to the benefit of the UK economy.
These changes shall take effect on 29 March 2019. In relation to these changes, if an application for entry clearance, leave to enter or leave to remain has been made before 29 March 2019, such applications will be decided in accordance with the Immigration Rules in force on 28 March 2019.
Transitional arrangements are being applied to ensure the above changes regarding two-year source of funds checks, investment in UK government bonds, FCA regulation of intermediary vehicles and the definition of ‘active and trading’ companies do not have an adverse impact on investors who entered the category under the rules in place before 29 March 2019. These transitional arrangements will continue until 5 April 2023 for extension applications and 5 April 2025 for settlement applications. The other changes above do not alter the requirements of the category substantively, and it is considered proportionate to apply them to future extension and settlement applications by investors already in the category.
The above test is being extended to cover circumstances where there are reasonable grounds to believe that the funds have been, or will be, transferred internationally by means which are unlawful in any of the countries involved. The overall test is also being extended to extension and settlement applications, for the sake of clarity and consistency, to make clear that subsequent applications may be refused if evidence showing the above has come to light since the initial application was granted. This supplements the existing provisions that require such applicants to remain in control of their funds, and not fail under the General Grounds for Refusal.
You can find out more information here.