Over the last decade, the UK has become a popular destination for private individuals and families seeking to invest, work, or reside. The country’s political stability, education system, and professional services infrastructure have been significant factors in its attractiveness. Over the past two years, there has been a substantial shift in the UK’s immigration landscape for investors, which ultimately resulted in the sudden closure of the Tier 1 Investor route for new applicants in February 2022. The unexpected move has left a significant gap in the market, as around 300 potential new applicants annually who were willing to invest a minimum of £2 million ($2.4 million) into the UK no longer have appropriate visa routes to do so.
In recent times, the world has witnessed a trend away from passive investment-based migration routes and towards visa routes that emphasize active investments that result in concrete benefits, such as job creation or business expansion. While the UK broadly aligns with this trend, it presently lacks a highly appealing immigration route for overseas investors and entrepreneurs, which leaves high-net-worth families seeking to relocate with less clear alternatives.
Visa Routes to Explore
1. Skilled Worker Visa
The Skilled Worker visa may be a viable option for many individuals as it allows them to work in the UK after being sponsored by an active UK company with at least one British or settled employee. The visa permits the sponsored worker to reside in the UK without restrictions, but they must primarily work for the sponsoring UK company. However, the skilled worker visa allows for limited provisions for “supplementary” work outside of the primary role
Establishing an active company in the UK, such as an investment arm of an overseas entity, can be a solution for individuals looking to explore opportunities beyond the skilled worker visa. The established company can sponsor overseas employees, including the individual, as long as there is a genuine vacancy and commercial need for the UK roles. However, it’s important to seek immigration and tax advice before pursuing this option, as there are several compliance matters to consider.
2. Expansion Worker Visa
Another viable option for entrepreneurs looking to relocate to the UK is the expansion worker visa. This visa specifically targets individuals who want to establish a presence in the UK with their existing overseas business. Unlike the skilled worker visa, the expansion worker visa only requires the sponsoring company to establish a presence in the UK, without the need for an established trading presence or employment of a British or settled worker.
The Expansion Worker visa may seem like an easier option to set up initially, but it is a “gateway” visa that requires the visa applicant to switch to the skilled worker visa route within 2 years of time.
3. Global Talent Visa
The UK’s Global Talent Visa is an option for exceptional leaders in the arts and culture, science, or tech sectors who can demonstrate high-value achievements in their field. While the route has specific criteria for applicants, it appeals to those who qualify. This visa option provides the freedom to work for any employer or establish a personal company, and it may lead to permanent residency after only three years of residence in the UK.
The number of successful applications for the UK’s global talent visa has increased in recent years, particularly in the tech sector. This route is not limited to individuals with typical technical skills like coding or web development, as investors and leaders in the tech sector who can demonstrate a successful track record in growing or scaling tech companies may also be eligible.
Tech Nation, the independent organization responsible for assessing global talent applications in the tech sector, will cease operations on March 31 due to funding issues. While a new endorsing body is expected to be appointed in the future, no official announcement has been made yet.
4. Innovator Visa
The innovator visa is the closest alternative for international entrepreneurs and investors who were considering the closed investor route. However, the innovator visa has proven to be less effective and efficient, and the authorities promised significant changes to the route in the autumn of 2022, which did not materialize.
The UK government is likely to hold consultations with stakeholders before making any decisions on a potential replacement for the investor visa route. However, there is no set timeline for when this will occur. With other countries already offering viable investment-based visa routes, it is crucial for the UK to develop a competitive and attractive option to continue to appeal to foreign investors.
Individuals or companies seeking to settle in the UK or set up a business through the above-mentioned routes must take into account the various tax implications associated with the relocation. As a general principle, the tax liabilities of individuals are significantly affected by their physical presence in the UK, thus making it crucial to seek advice on tax and immigration when planning the timing of the relocation.
To obtain permanent residence in the UK, individuals must spend more than half of their time each year in the UK, typically for a continuous period of five years. It is crucial to note this requirement. This requirement is essential to keep in mind, as it will almost certainly give rise to tax implications that require careful consideration. Therefore, it is critical to obtain strategic advice if your plan is to make the relocation permanent.
Comprehensive guidance on how to organize a planned expansion to the UK, taking into account both personal and corporate tax considerations, is of utmost importance.