Out-Law / Your Daily Need-To-Know

Wealthy entrepreneurs coming to UK double in a year, according to new figures

Out-Law News | 26 Feb 2013 | 9:28 am | 3 min. read

The number of foreign entrepreneurs heading to the UK to start new businesses has more than doubled in a year, according to figures obtained by Pinsent Masons, the law firm behind Out-Law.com.

According to the figures, 462 people were issued with 'entrepreneur visas' in the year leading up to June 2012; up from 199 the previous year. Entrepreneur visas allow foreign nationals to start a business in the UK and earn a fast-track to UK citizenship, providing that they can meet strict requirements on access to funding, job creation and business success.

Immigration law expert Simon Horsfield of Pinsent Masons said that the "huge increase" in interest could be attributed to the UK's growing importance as a technology hub as well as increased hurdles to obtaining the right to work in the UK by other means.

"Many of these entrepreneurs will have been attracted to some of the UK's fastest-growing business sectors, such as the UK's rapidly expanding IT start-up sector, which is centred around 'Silicon Roundabout' in London," he said.

"Entrepreneur visas are not about people 'buying' a fast track to UK citizenship. To satisfy the visa criteria, applicants have to create jobs and prove that they will make a long-term contribution to the UK economy. These entrepreneurs can be hugely beneficial to the economy - they'll bring fresh ideas, create new jobs and provide a boost just when the economy needs it."

Entrepreneur visas were introduced in 2008. To qualify, applicants must be able to prove that they have access to at least £200,000 to invest in a business and at least £3,100 in savings. The investment requirement is lowered to £50,000 if the cash comes from an FSA-registered venture capital firm. Applicants must also have English language skills.

Successful applicants must start their business within six months of being granted the visa. If, after three years, holders of entrepreneur visas can demonstrate that they have created 10 permanent jobs in the UK or generated income of at least £5 million, they will be able to apply for indefinite leave to remain in the UK at that time. Those who have obtained the right to work in the UK through another type of visa usually have to wait for five years before becoming entitled to apply for indefinite leave to remain.

The figures showed that the visas had become increasingly popular since their introduction. Only 11 entrepreneur visas were issued over the whole of 2008, rising to 52 in 2009. By contrast, 75 entrepreneur visas were issued in April 2012 alone.

Although the visas were most commonly issued to American entrepreneurs, with 102 successful applications last year, five times as many were issued to Chinese entrepreneurs last year as in the year before. 54 visas were issued to Chinese entrepreneurs in 2011/12, up from just nine in 2010/11. There were 77 successful applicants from Pakistan, while applicants from India and Australia made up the rest of the top five countries by visas issued.

"The tough requirements - including English language proficiency - mean the people applying for entrepreneur visas are quite different than those using alternative routes to citizenship, such as investor visas," immigration law expert Simon Horsfield said.

"Investor visas are often used by High Net Worth Individuals (HNWIs) looking for a quick route to stay in the UK, which can be a 'safe haven' from judicial or political uncertainty at home. Russians and Iranians, for example, are among the fastest growing users of investor visas. Entrepreneur visas are far more frequently used by those from the English-speaking world or by those from countries with long-established, large expat communities from the UK," he said.

Increasingly tight rules on immigration have boosted the popularity of specialist visas such as investor or entrepreneur for HNWIs, Horsfield said. Recent research by Pinsent Masons found that the number of UK investor visas issued increase by 78% to 419 last year, with a particularly notable increase in successful applications from Russians.

"The Government has made it much harder for foreign nationals to work in the UK," Horsfield said. "The traditional route for HNWIs or skilled migrants, the 'tier one (general)' visa, is now closed to new applicants from overseas and is only available in very limited circumstances for individuals who are already in the UK under another immigration category. The Government has even tightened the already strict entrepreneur visa criteria recently."

Immigration minister Mark Harper announced that a 'genuine entrepreneur' test would be added to the rules last month. This will allow UK Border Agency (UKBA) caseworkers the ability to test the credibility of applicants they deem "suspicious". Entrepreneurs, including those who have already been granted indefinite leave to remain in the UK, will also have to meet the necessary minimum funds requirements on an ongoing basis, rather than solely at the time of application.