Fri, 24/01/2014 - 10:14
Upping the GBP1m investment threshold to GBP2m would not have a detrimental impact on the number of Tier 1 investors coming to the UK, according to a survey by law firm Kingsley Napley.
However, changing the nature of permissible investments by these investors would deliver more benefit to the UK economy.
Further the proposed introduction of an English language test is unlikely to be an issue for incoming Tier 1 investors, the survey found. But requiring dependants of these investors to have to wait five years for a permanent visa would be problematic and could deter investors from making significant investments here under the scheme.
Such are the findings of a Kingsley Napley survey of wealth managers and high net worth (HNW) investors undertaken in order to gather evidence for its submission at the end of November to the Migration Advisory Committee (MAC) consultation on the economic impact of the Tier 1 investor route.
There were 530 Tier 1 Investors entering the UK in 2012-2013, injecting over GBP530m to the UK economy. The MAC is due to report to the government in February 2014 on how the scheme can deliver greater benefit in future.
“Our survey shows changing the areas where Tier 1 investors can invest is most likely to improve the UK’s attractiveness for these high value migrants and result in more effective benefits to the UK,” saysNick Rollason, head of immigration at Kingsley Napley and lead partner on Kingsley Napley’s international families and investors programme.
Fifty five per cent of respondents supported allowing donations to sporting and cultural projects to apply. Another suggestion is for clearer guidelines on investing in private companies via venture capital and start-up funds.
“At present, there is a significant vacuum in seed funding or second round funding below GBP2 million, particularly in the Technology sector, which we have identified could be filled by funds from the Tier 1 investor route,” Rollason says.
Kingsley Napley also proposed in its submission to the MAC that Tier 1 investors should be permitted to direct their money to areas which have experienced cuts in the recent recession, such as education, the arts and medical research, perhaps with the government or charitable bodies spearheading funds to accept additional investment into this area.
“We should be in no doubt there is global competition for high value migrants, most dramatically the recent scheme unveiled in Malta,” Rollason says. “The choices on offer to them for relocation and investment through various national programmes are many. By commissioning the MAC report, the government has an opportunity to make vital changes to ensure it helps the UK remain attractive in the global investor race and at the same time delivers maximum benefit to our economy.”
Simply raising the minimum threshold for Tier 1 investors and leaving the rest of the route unreformed would be an opportunity missed and is likely to drive prospective investors to other EU countries and international schemes, Rollason adds.
Kingsley Napley’s survey found the two most influential reasons internationally mobile HNW families, who are considering relocation, find the UK attractive are:
1 The business and investment opportunities available in the UK;
2 The quality of education here, with private schooling being a big draw for younger families in particular.
Other top attractions include quality of life, and the English legal system and tax regime.
Of all the challenges involved in an international relocation, obtaining visas to the UK for both the incoming investor and their dependants was cited as the most burdensome aspect. The survey found that the current rules on rewarding investors putting GBP5m or GBP10m into the UK with a fast track to permanent residence were not being used because the investor’s family was excluded.
"Our own experience as a firm in recent years is that several wealthy investors considering the UK decided not make a higher investment here since their dependants would be excluded," Rollason says. "Effectively the economy lost out on approximately GBP100m from our clients alone for that reason. That is why we have called upon the MAC to relax the visa restrictions for dependent parties if the UK wants to see the full direct and indirect benefits that Tier 1 investors can bring. Many investors want to buy a property here, bring children here and employ staff here and we need to make the visa system more friendly to cater for that scenario if we want the UK to stay competitive in the race for value migrants."
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