Major changes to the UK Immigration Rules
There have been major changes to the UK Immigration Rules, most of which will take place from 29 March 2019. The main changes are to Tier 1 of the Points Based System and to the new EU Settlement Scheme.
Points Based System
Tier 1 (Investor) Category
Changes will take effect on 29 March 2019 that introduce more stringent regulations as follows:
- The requirement to show source of funds if £2 million has been held for less than 2 years (previously 90 days). This includes funds later invested to reach accelerated settlement (permanent residence).
- The requirement to have a UK bank account will be tightened, requiring the UK bank to confirm that they have carried out all required due diligence checks and Know Your Customer enquiries.
- Investments in UK Government bonds will be excluded.
- The definition of an “active and trading” UK company has also been tightened. Stronger evidence of trading in the UK as follows:
- Registered with Companies House in the UK.
- Registered with HMRC for corporation tax and PAYE.
- Accounts and UK business bank account showing regular trading.
- At least two UK employees who are not directors.
- A limited acceptance of collective investments. Pooled investments that receive funding from a UK or devolved government department or one of its agencies will be made an allowable investment.
- Tightening use of intermediary vehicles used for investment. The intermediary vehicle must be regulated by the FCA and the investor will need to produce evidence of the final investment destination and how funds were transferred there.
- Clarification that £2 million investment is the price paid by the investor rather than the market value.
- Extension applications submitted abroad will now be granted for 2 years rather than the previous 3 years 4 months so they are in line with extensions in UK.
- Applicants can be refused the visa if the Home Office have reasonable grounds to believe the funds used for the investment breached exchange controls. This will also apply to extensions and settlement which means that if the Home Office think there is a breach of exchange controls the investor could lose their status.
There will be transitional arrangements in place for investors who applied prior to 29 March 2019 which means the Rules in place before 29 March 2019 will continue to apply to them until 5 April 2023 for visa extensions and 5 April 2025 for settlement (permanent residence) applications.
An important note is that the arrangements in place for those who entered the category under the Rules in force before 6 November 2014 i.e. the £1 million route, will end on 6 April 2020 for extensions and 6 April 2022 for settlement which means applicants applying for an extension or settlement after these dates will have to meet the 29 March 2019 criteria i.e. £2 million and no gilts.
Tier 1 (Entrepreneur) Category
This category will be closed to new applicants from 29 March 2019 onwards. Extension applications for those already within this category will remain open until 5 April 2023 and open for settlement applications until 5 April 2025. Tier 1 (Graduate Entrepreneur)route will be closed on 06 July 2019.
New Appendix W
Two new visa categories will be introduced – Innovator (replacing Tier 1 Entrepreneur) and Start-up (replacing Tier 1 Graduate Entrepreneur). They are set out in a new Appendix W which will come into force on 29 March 2019. It is anticipated that other worker categories (Part 5, Part 6A) will be added to Appendix W in a move away from the Points Based System.
- Start-up Category
This is for those starting a new business for the first time in the UK, applicants need not be graduates and will not need to have secured any initial funding. Successful applicants will be granted 2 years’ leave (doubled from 1 year offered to Tier 1 (Graduate Entrepreneur)) and applicants can then progress into the Innovator category to continue developing their businesses. It is only possible to stay in the start-up category for a maximum of 2 years and therefore this category does not lead to settlement.
- Innovator Category
This is for more experienced business people requiring endorsement and funding of £50,000 (reduced from £200,000 required for Tier 1 (Entrepreneur)). There is no time limit as to how long an applicant can stay in this category, however endorsement will be required at various stages based on innovation, viability and scalability at entry clearance/initial application, extension and settlement stages. The endorser must also be “reasonably satisfied that the applicant will spend their entire working time in the UK on developing the business venture” and the innovator cannot work for another business. The funding requirement can be waived for those switching from the Start-up category to Innovator.
Applicants whose initial business idea did not succeed may re-apply with a new business idea for endorsement under the entry clearance/initial application stage.
The Innovator category may also lead to settlement. Innovators will be eligible to apply for settlement after 3 years continuous residence in the UK as an innovator, provided they satisfy at least 2 of the following criteria:
- at least £50,000 has been invested and spent in the business;
- the number of the business’ customers has at least doubled in the 3 years and is higher than the mean number of customers for other UK businesses offering comparable main products or services;
- the business has engaged in significant research and development activity and has applied for intellectual property protection in the UK;
- the business has generated gross revenue of at least £1 million;
- the business is generating at least £500,000 in revenue with at least £100,000 from exporting overseas;
- the business has created at least 10 full time jobs for resident workers; and
- the business has created the equivalent of at least 5 full time jobs for resident workers paying at least £25,000.
Start-up and Innovator Categories
Applicants within both routes will need to be:
- Endorsed by trusted organisations in the UK – a list of organisations who can endorse someone for these visas has not yet been released.
- Stay in contact with the endorsing body at regular intervals – 6, 12 and 24 months.
- Meet the level B2 English Language Requirement.
- Meet maintenance requirements.
- Family members of applicants will be covered Under Part 8 (Family Member of a PBS Migrant).
Tier 1 (Investor), Tier 2 (General) and Tier 4 (General) or (Child) can switch into Start-up.
Tier 1 (Graduate Entrepreneur), Tier 1 (Entrepreneur), Tier 2 and visitor (Prospective Entrepreneur) can switch into Innovator.
Tier 2 (General)
The Codes of Practice within Appendix J have been amended, resulting in an increase in the minimum salary sponsors will need to pay applicants under many of the Standard Occupational Classification Codes.
Students with a Tier 4 (General) visa can now apply to switch into this category up to 3 months before the expected completion date of their course.
Those applying for settlement from within this category need earn a minimum salary of:
- Applying before 6 April 2019: £35,500
- Applying before 6 April 2020: £35,800
- Applying before 6 April 2021: £36,200
- Applying before 6 April 2022: £36,900
- Applying before 6 April 2023: £38,800
- Applying before 6 April 2024: £40,100
EU Settlement Scheme
The EU Settlement Scheme will be fully open from 30 March 2019 and will include EEA and Swiss nationals. The changes will enable eligible applicants outside the UK to apply which means they can obtain their status without needing to travel to the UK. Applicants under the Scheme will now be able to rely on a wider range of documents as proof of their identity and nationality.
This article was written by Rose Carey. For more information please contact Rose on +44 (0)20 7427 6524 or by email via email@example.com
News & Insights
Employers must record daily working time
The ECJ has held that employers are obliged to set up a system for measuring actual daily working time for individual workers.
Tim Maxwell and Rudy Capildeo write for STEP Journal on the nuances of UK artists' estates and how to manage them
Rich pickings for HMRC? The new UK tax rules on “property-rich companies”
The scope of UK tax for non-residents has been extended to catch gains on disposals of interests in “property-rich companies”.