When it comes to investing the UK for the purposes of a visa, there are many different rules and regulations that surround exactly what businesses you can invest in and how you can use funds that have been invested. These recently changed again in March 2019. So if your visa application comes after that you will be subject to the new rules which may have a significant impact on what you can do investment-wise. Let us take you through it.
Basics
The main rules remain the same, you need to be able to invest a minimum of £2M to qualify for a Tier 1 investment visa. These monies need to remain invested for the duration of the investment period to qualify for Indefinite Leave to Remain. This doesn’t mean that you aren’t able to be flexible with your options, but you need to understand what you can do. The investment need not be in a single company, it can be spread around, but the initial total must exceed £2M. During the lifetime of the investment if the value changes you can trade the investment, what you are not able to do though is realise any profits until the end of the period. For example, if you invest £200K in a business and it performs well such that your investment is now worth £500K, you are not able to take the extra £300K when trading the investment, the entire £500K must remain invested. The converse is also true. If you invest £200K and the company underperforms such that your investment is now worth £100K then you can trade that £100K into another business and it will still count as a total investment over the £2M cap.
Property and Government Bonds
Before March 2019 you were able to invest your monies into UK Government Bonds. These were usually a fairly safe investment as they are not highly volatile. This option was removed by the rule changes in March 2019 though. The other major category that was removed in March 2019 was property. You are no longer allowed to invest solely in property. This also includes investing in any business that derives a portion of its profits from property investment. This means that companies that buy properties to refurbish and sell on, as well as companies that buy properties to let, or manage are also excluded under the new rules as these are all deemed to be companies that derive profits from property investment. What you can invest in are construction companies where the company derives its profit from the building of property. You can also invest in estate agents who solely market properties and don’t let or manage properties or act as a landlord. You are also able to invest in hotels where the sole function is to rent rooms on a temporary basis. The final category you can invest in are refurbishment companies who do not purchase the properties that they refurbish. The easy way to check is to ask yourself ‘does the company make its money from the sale of goods or services’?, then it is okay to invest. If the company makes its money from an increase in property value or rent, then this would be off-limits.
Active and Trading UK Companies
The wording of the rules states that you can only invest in an active and trading UK registered company. The investment needs to be done in the form of the purchase of share capital or loan capital. To be an ‘active and trading UK Registered Company’ then the company to be invested in needs to have its registered office or head office in the UK. It needs to have a UK company bank account that shows recent transactions and it also
needs to be registered in the UK for the purposes of corporation tax. Multinationals are acceptable provided they have a registered office or head office in the UK. The company must also be actively trading. It cannot be a dormant or non-trading company. These rules exist to prevent individuals from setting up shell companies for the purposes of obtaining a visa. You also need to be careful not to invest in an offshore company or trust. The UK government doesn’t classify these are UK registered companies for the purposes of a Tier 1 investment visa. This is generally because these companies do not provide a full tax benefit to the UK government. You must also ensure that you do not invest your funds in an open-ended investment company, an investment trust company or other pool-resource investment company as these will not be counted by the UK Government as a valid investment company for the purposes of the Tier 1 visa.
Conclusions and Further Help
The rules on investing in the UK have been tightened up recently. This is to help reinforce the original premise of the investment visa and that is to bring maximum economic benefit to the UK through foreign investment.
The means that the only real option now is to invest in an active and trading UK registered company that pays taxes to the UK government. The rules themselves are complex and an individual looking to make an investment in the UK for the purposes of obtaining a Tier 1 visa should seek professional advice before making any decisions. Our team of solicitors has a great deal of experience with the rules when it comes to Tier 1 investment visa applications.
If you already have a Tier 1 visa and you are currently considering a Tier 1 entrepreneur visa extension then get in touch with a Immigration solicitors London. They will be able to signpost investors to the best ways to make their investments and also help with the visa application process. This will include being able to collect all of the relevant evidence to show that the investments have been made in compliance with the rules. Get in touch with our team of lawyers and your next investment in the UK will be much easier. They will also be able to help with the transition to Indefinite Leave to Remain when the time comes.
