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Major changes to Immigration and its impact on your business

04 April 2019

Back in December 2018 The Government published White Paper on the future of the Immigration system envisaged to be phased in by 2021. The most recent changes to the Immigration rules were published on 7th March 2019 and will put the majority of the changes into effect from 29th March 2019.

These changes introduce two new categories, Start-Up and Innovator, for people seeking to establish a business in the UK. These new categories are set out in a new Appendix W to the Immigration Rules and do not form part of the Points-Based System. It is anticipated that there will be a gradual move away from the existing points based system as more immigration categories are reformed.

Here is a summary of the main changes:

Closing of Tier 1 (Entrepreneur) and creation of “Innovator” route

The Tier 1 (Entrepreneur) category is being closed and will be replaced by the new “Innovator” visa route. The old route will close to new applicants from 29th March 2019. This follows the recommendation of the Migrant Advisory Committee that the route was in need of substantial reform. Current holders of the existing visa will be able to extend until 5th April 2023, and apply for settlement until 5th April 2025.

Previously, Tier 1 (Entrepreneur) applications were subject to the “Genuine Entrepreneur” test, in which Home Office officials would scrutinise the applicant’s business plan for viability and genuineness. This will change and applicants in the new route will now need prior endorsement from a designated endorsing body approved by the UK Government. These bodies will assume a similar function and assess whether the proposed business is innovative, viable and scalable.

Endorsements for extension applications in the Innovator category will be based on assessments of whether applicants have made significant achievements against their business plans, and whether their businesses are trading. The Home Office has not yet confirmed which bodies would be authorised to issue endorsements but has set out the qualifying criteria.

As well as an endorsement, applicants will need £50,000 to invest in their business from any legitimate source. This is a reduction from the previous required investment of £200,000 for most applicants. The funding requirement will be waived for those switching from the Start-up category who have made significant achievements against their business plans.

Innovators will be eligible to apply settlement after 3 years and will be judged against a range of criteria covering investment, innovation, business growth and job creation. Applicants will have to satisfy 2 of the criteria to qualify.

Closing of Tier 1 (Graduate Entrepreneur) and creation of “Start-Up route”

This route will officially close to new applicants from 6th July 2019 and is being expanded and rebranded as the “Start Up” visa category. The new category will be open to applicants starting a new business for the first time in the UK, not just recent graduates.

It will differ from the previous incarnation in that applicants will no longer be required to have secured initial funding for their proposed business, but will have to be endorsed by an independent endorsing body similar to the Innovator route.

This category will not automatically lead to settlement and would be only be for an initial two year period, after which applicants could switch over into the new “Innovator” route.

Current holders of Tier 1 (Graduate Entrepreneur) visas will be able to switch into the Tier 1 (Entrepreneur) until 5th July 2021 and extend until 5th July 2025. Settlement applications will be accepted until 5th Jul 2027.

Tier 1 (Investor)

The Tier 1 (Investor) category is for high net worth individuals making an investment of at least £2 million in the UK. The category is being reformed with changes to take effect from 29th March 2019 following concerns raised about the character and conduct of applicants using the route and the sources of their funds.

Applicants will now have to provide evidence that they have had control of the investment funds for a period of 2 years as opposed to 90 days to provide greater assurance of the genuineness of the sources. Applicants will also be subject to explicit rules requiring that their bank must carry out all required due diligence checks and Know Your Customer enquiries.

Investment in UK government bonds will now be excluded with the intention of incentivising applicants towards other forms of investment.

Changes to Tier 2

The minimum salary threshold for Tier 2 has been £30,000 since 3 November 2016. An exemption to this was introduced for Nurses, medical radiographers, paramedics and secondary school teachers teaching maths, physics, chemistry computer science and Mandarin. This exemption was due to end in July 2019, but is being extended and reviewed as part of the new immigration system expected in 2021.

There has also been an update to Appendix J which sets out the appropriate salary rates for each occupation. The previous update was in April 2017. As in previous years an annual uplift in line with wage inflation is being applied to the earnings threshold and will apply to settlement applications made from 6th April 2023.

Changes to Tier 4

The list of countries in Appendix H has been updated. Appendix H governs which countries are deemed low risk and benefit from reduced documentary requirements in student visa applications. New countries added are Brazil, Kazakhstan, Mauritius, Oman, Peru and Tunisia. Countries removed are Argentina, the Maldives and Trinidad and Tobago.

If the main applicant has dependents, both the applicant and dependents must be nationals of Appendix H countries to benefit from the streamlined process.

By Hesham Shoeb

For further advice on Immigration law, please call us on 01483 543210 or alternatively email heshamshoeb@barlowrobbins.com

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