W&F Issue 5 2018

www.wealthandfinance-news.com 30 Wealth & Finance International - Issue 5 2018 While it has operated since 1994, in 2004 changes were introduced around the regulations and application process for the Tier 1 investor visa, which largely flew under the radar. However, when the UK points-based immigration system was introduced in 2008 and a concrete set of requirements were implemented around the previously-subjective Tier 1 visa, high-net-worth individuals and private investors from across the world began to realise the scheme was in place and started taking advantage of the benefits it could bring. In order to be eligible to apply, individuals must have £2 million or more of their own money, held in one or more regulated financial institutions, which is disposable in the UK, along with a UK bank account. Investing this lump sum of funds allows a visa to be granted for an initial period of three years and four months, which can be extended. After five years the individual can apply for ‘indefinite leave to remain’ in the UK, otherwise known as settlement. Depending on the amount invested, the time period after which indefinite leave can be applied for is shortened; for example, investors bringing £2 million can apply after five years, those investing £5 million after three and those bringing £10 million or more after two. The applicant can also bring a spouse and any children under 18 years along with them as dependents. Gaining indefinite leave to remain is very similar to citizenship. Individuals are able to access many of the same rights as UK citizens, including education and healthcare, however they do not have the right to vote. If citizenship is ultimately the end goal for any Tier 1 applicant, the option to apply for this further down the line is there, if residency requirements are met. Additionally, it is worth noting that anyone holding indefinite leave to remain who exits the country for more than two years will lose their status. Since its introduction, the Tier 1 investor visa has experienced waves of popularity, partly in response to changes to its specific requirements, and partly due to global geopolitical issues. In late 2014 the Government announced the minimum amount for investment would be raised from £1 million to £2 million, prompting a huge surge in the number of applicants ahead of the changes being introduced. However, following a sharp decline in 2015, figures for recent years show that the number of applicants is once again on the increase. In the final quarter of 2017, the UK Government issued 81 Tier 1 visas, 32 per cent more than in the same period in 2016. Whilst this acts as a useful indicator that foreign investors still remain confident in the future success of the UK economy, it is also interesting to see where these wealthy individuals are coming from. Whilst 60 per cent of those visas issued were to individuals from China and Russia – typically the two countries with which the scheme is most popular – there were also increases in the number of applicants from Turkey, Iran, the USA and Canada. The locations of these countries demonstrate the varying reasons why the Tier 1 scheme is so popular. Particularly in the Far East, the scheme is often viewed as a fast track scheme into UK higher education, with families gifting their children lump sums for investment. For students, the benefits of not being on a student visa means that after courses are complete and qualifications have been secured, the Tier 1 visa allows them to apply for indefinite leave to remain, without negotiating the standard immigration channels. For other countries around the world, the UK is still seen as a more Mapping the Surge in Popularity of the Tier 1 Investor Visa stable investment option and for them, applying for the Tier 1 visa forms part of a move to seek more economic certainty. Whilst the benefits of the scheme are clear, there are some considerations that potential applicants must bear in mind when taking this route. Holding a UK bank account is a requirement for eligibility and whilst there are many institutions which offer the global reach to make this a possibility, the process is not always straightforward and can take some time, so setting this up well-ahead of beginning the application is advisable. Additionally, by their nature, many high-net- worth individuals are globally mobile and often tend to travel for a large percentage of the year, conducting their business around the world. One condition of getting indefinite leave to remain through the Tier 1 scheme is that you remain a resident in the UK for six months of every year, for individuals who travel a lot, this must be taken into account. Whilst the application process itself isn’t onerous, individuals would be well-advised to seek specialist wealth planning, tax and legal advice well in advance. Many wealth managers are Tier 1-compliant and will be able to advise on where investment can and can’t be made to meet eligibility criteria and to what extend investment returns will be subject to tax. For example, it is useful to know that investments in property are not permitted as part of the scheme. The growth in popularity of the Tier 1 investor visa should be comforting news for the UK as increasing inward investment and the knowledge and talent that goes with it is a clear sign of the health of the economy. For wealthy individuals Since the vote to leave the EU in June 2016, the thorny issue of immigration has dominated public and political discourse in the UK. However, a recent surge in the number of applicants for Tier 1 investor visas has provided positive reassurance that countries overseas still have faith in the UK economy and consider the British Isles a suitable place both for relocation and for the investment of their funds.