UK increases Tier 1 (Investor) visa investment threshold to £2 million

16 October 2014

Changes to the UK Tier 1 (Investor) immigration category were announced today by The Home Office, which will come into force on 6 November 2014.  The changes are in response to the Migration Advisory Committee report of February 2014, which recommended significant changes to the category.

The key changes are as follows:

  • The initial investment threshold will increase from £1million to £2million
  • New investors will no longer be able to allocate 25% of the investment into UK assets such as UK property which they live in. The entire £2million will need to be invested
  • The loan option has been removed
  • Topping up of investments accounts will no longer be required if the invested amount falls below the required level. However, if investments are sold, they will need to be replaced within the same reporting period
  • Source of funds-visa officers are being empowered  to refuse Investors  if they have reasonable grounds to believe the funds were obtained unlawfully or if they have concerns about the character and conduct of the party “providing the funds”-this could extend to those gifting the funds to the investor

Action required by potential investors

Advisors, wealth managers and other HNW intermediaries are advised to discuss the changes with potential clients who are considering coming to the UK under the Tier 1 Investor category. If these client wish to apply before the change on 6 November based on the current £1million investment or the loan option, they will need to ensure that the funds are available and that they have documentary evidence to prove that the funds have either been held for three months before (and not including) 6 November or the source of the funds, such as a deed of gift, or other distribution.

As long as the evidence of funds is in place and the online visa application and fee payment are made before 6 November, clients will be able to come in under the current rules, even if they have biometric appointments and submit their documents after that date.


Commenting on the changes, partner and Head of Immigration Nick Rollason said:

"While the increase in the investment threshold to £2m may have a deterrent effect at the budget end of the investor market, our client research shows that the increase will not in fact have a significant impact on their decision to come to the UK - this will continue to be driven by the major sell factors of the UK as a major education, business and cultural hub.

Similarly, the removal of the ‘loan option’ is unlikely to have a huge impact as this was not popular with applicants.  The main effect of the loan option being stopped may be felt by potential Chinese investors who have used the loan option due to current restrictions on taking capital out of the PRC.

The new requirement to invest the full £2 million into the portfolio of specified investments and the exclusion of investment of up to 25% of the overall amount into a UK home is an unexpected change. In practice, however, many of our investor clients have invested the full amount into their portfolios.

However the increase is likely to mean those coming as Tier 1 investors will look for greater returns from their UK investment and as a result wealth managers may need to look beyond offering gilts only portfolios for this market. The removal of the requirement to ‘top up’ if a portfolio drops below £2million is a welcome change and there will only be a requirement to purchase new qualifying investments if an investor sells part of their portfolio. This will allow Tier 1 investors to take greater risks with their investments.

Entry Clearance Officers will also have greater discretion when considering applications to refuse if they have concerns about the control the applicant has over the funds, the lawfulness of the source of funds or the character of the person who has provided the funds, if a third party. It is likely that investor s will need to provide more information on the source of funds in order to pre-empt queries at the visa stage-there may therefore be a greater role for wealth managers to play in confirming that the client has been successfully on-boarded by a UK regulated institution.

We welcome the Government's statement that they will consult further on what sort of investments may deliver real economic benefits to the UK.  To broaden the investment options beyond gilts is a change which is overdue and could have a positive effect on charities as well other financial instruments."

Further information

Should you have any questions about these changes to the Tier 1 (Investor) visa rules, please contact Nicolas Rollason.

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