The UK’s Tier 1 (Investor) Visa scheme which allows foreign investors to live in the UK is to be suddenly suspended from midnight on Friday 7 December 2018, with the UK Government saying they have concerns that the Visa route has been used for money laundering.
Tier 1 (Investor) Visas were introduced in 2008 with some reforms made in 2014. Broadly, they require the holder to invest a minimum of £2 million in to UK assets and spent at least 183 days per year in the UK if they want to then secure indefinite leave to remain after five years.
But the Home Office announced this morning that the scheme would be suspended from midnight on Friday amid ongoing efforts to tackle serious organised crime. However, they also advised that the suspension will end once toughened measures have been put in place.
More than 1,000 Tier 1 (Investor) Visas were granted in the year ending September 2018, with the vast majority of these going to genuine business investors moving to the UK and UK banks and assets managers undertaking their usual anti-money laundering checks on funds they receive and invest for the Visa applicant. However, the Home Office has indicated that the applicant is likely to face much closer scrutiny of their finances and source of wealth in future when the scheme is revived.
Whilst the Government have justified this sudden suspension in terms of anti-money laundering, it is also well known that changes to the system have previously been considered. Some changes were made to the investment requirements in late 2014, when the minimum amount to be invested rose from £1million to £2 million. However, the current rules mean that these investors are often incentivised to invest in low risk assets where asset value is unlikely to move and therefore they often invest only in UK Government bonds. They are disincentivised from investing in the UK company shares or other UK businesses which may make their investment even more valuable to the UK. When the Tier 1(Investor) Visa regime is reintroduced, it may be reasonable to expect the investment criteria to change so as to encourage more high risk investment to boost the UK economy.
There is no indication that existing Tier 1 (Investor) Visas will be revoked but those considering moving to the UK should take advice from an immigration lawyer on their move. If you would like to discuss the tax implications for you of moving to the UK or how you may be taxed on different types of investments which may be required in future, please contact us.