Government announces Lasting Power of Attorney “revamp”
In a bid to boost overseas inward investment, the UK Government has rolled out the red carpet to foreign entrepreneurs and investors. This resulted in the overhaul of two visa categories, Tier 1 (Investor) and Tier 1 (Entrepreneur) of the Points Based System (PBS) on 6 April 2011. Both categories now provide for an accelerated path to permanent residence in the UK with less restriction on the time which needs to be spent in the UK to qualify.
Tier 1 (Investor)
Under this category, high net worth individuals can come to the UK to live and work, provided that they have at least £1 million at their disposal and these funds are available for investment in the UK. The funds must be held in regulated financial institutions and can be:
Investors must invest at least 75 % of the funds in either UK Government bonds, share capital or loan capital in active and trading UK registered companies. The remaining 25 % of the funds can be maintained in cash deposits in UK banks or represented in the unmortgaged value of property in the investor’s own home or other assets kept in the UK. The investment must be made within three months from the date of entry to the UK.Throughout the period of investment; the overall funds must remain at a minimum level of £1 million. Therefore, the investor must ensure that, should the investment dip in value at any time, it must be topped up to remain at £1 million.
Extension of leave:
Initial permission under the Tier 1 (Investor) route will be granted for a period of three years. Throughout this time on a quarterly basis, the applicant must retain evidence that the investment has been maintained and, if the UK Border Agency (the relevant UK Government department) is satisfied, they should grant a further two years’ stay in the UK. At the end of five years, the investor and dependant family may apply for permanent residence (also known as settlement or indefinite leave).
Permanent residence for Investors:
Under the new rules, new investors and those already in the UK in this category will be fast tracked to settlement in the following circumstances:
Where investors used loaned funds, they must further demonstrate that they still have net assets of at least twice the loan amounts to qualify. The new rules apply retrospectively and will mean that investors admitted to the UK under the old rules but who have held these higher amounts in qualifying investments can apply for settlement now or can increase their invested funds to accelerate their route to settlement.
In addition to the above fast track requirements, investors and any family members over 18 must also pass the ‘Life in the UK’ test and ensure that they do not have any unspent criminal convictions. In recognition of potential investors need to travel frequently, the UK Border Agency announced an increase in permitted absences from the UK up to 180 days in any 12 calendar months without jeopardising their application for settlement.
Tier 1 Entrepreneur
Under the Tier 1 Entrepreneur route, non European nationals can come to the UK to establish a business or acquire an existing business.
They need to demonstrate that they have not less than £200,000 of their own money available to make a fresh investment in a UK business. They may include funds made available by one or more other people (known as third party contributor/s -for example; family members as well as other investors). In these circumstances they must also provide a declaration from every contributor that the funds are available to the applicant, which includes confirmation from a legal representative that the declaration document is valid.
Alternatively from 6 April 2011, applicants can now also qualify if they have access to not less than £50,000 obtained from one or more registered venture capital firms regulated by the Financial Services Authority, UK entrepreneurial seed funding competition which has been endorsed by the UK Trade & Investment Department, or other UK Government Departments, made available for the specific purpose of growing a UK business.
A special Prospective Entrepreneur visitor category has been introduced to cater for entrepreneurs who need to come to the UK to continue discussions with any of the abovementioned entities, to secure funding. Once funding has been secured they can submit a Tier 1 Entrepreneur leave to remain application from within the UK.
These investment funds can now be shared by a team of no more than two entrepreneurs. In other words it will be possible for two individuals to come to the UK as Tier 1 Entrepreneurs using the same funds.
This application is subject to an English language and maintenance requirement, which does not apply to the Tier 1 Investor category.
They must demonstrate, if applying from outside the UK that they have at least £2,800 (or equivalent in foreign currency) of personal savings for themselves and (where applicable) £1,600 for each dependant accompanying them and that they have held these amounts for a minimum period of 90 days immediately preceding, and dated no more than one month prior to the date they submit the application. The balance cannot fall below the required minimum at any time during the three month period. For applicants applying from within the UK, the same principle will apply, however they will only need to show personal savings of at least £800 for themselves and £533 per dependant, for a consecutive 90 day period.
Extension of leave
At extension stage the Tier 1 Entrepreneur must show that the full amount of £200,000 or £50,000 has already been invested in the business.
They will also need to show that they have either registered as self employed with HM Revenue & Customs, registered a new company in which they will be a Director or registered as a Director of an existing company within a six month period of a specified date. For those who were granted entry clearance as a Tier 1 Entrepreneur, the specified date is calculated from the date of first entry to the UK. Where there is no evidence of this, then the specified date will be calculated from the date of the grant of the entry clearance; or the date of the grant of leave to remain. The Tier 1 Entrepreneur will also need to show that they have established a new business, or taken over an existing business and created the equivalent of at least two new full time jobs for persons settled in the UK. Tier 1 Entrepreneurs will also need to meet a maintenance criterion, as outlined above.
Tier 1 Entrepreneurs may now be eligible to apply for permanent residence after three years stay in the UK provided they can show their business has created at least 10 new jobs, or they have generated an income from the business of at least £5 million. Otherwise Tier 1 Entrepreneurs will need to wait five years before applying for permanent residence. Like the Tier 1 Investor category, they too along with any dependants over the age of 18 will be required to pass the “Life in UK” test and be free from unspent convictions. Like the Tier 1 Investor category, absences from the UK of up to 180 days in any twelve calendar months is now permitted without jeopardising their application for settlement.
British citizenship for those with leave under the Tiers 1 Entrepreneur and Investor categories
After having held permanent residence for one year, the settled person may apply for British Citizenship. The core requirements are that the applicant must not be absent from the UK more than 450 days in the last five years and 90 days in the last year prior to submission of their application and again must not have any unspent convictions.
By introducing an accelerated route to settlement the UK Government hope to attract foreign investment to the UK, however unless the current British nationality requirements are amended in line with these new provisions, the earliest they could naturalise as British citizens is five years, subject to meeting the abovementioned criteria before applying for a British passport.
This article first appeared in the IBA Immigration and Nationality Law Committee newsletter.
For more information, please contact: Nicolas Rollason, Head of Immigration.
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