Tier 1 (Investor) and (Entrepreneur)

In 2011 the government introduced a number of significant changes to the UK immigration regime that were aimed at reducing net migration by limiting the number of non-EU migrants permitted to come to the UK. Within the ‘high-value’ Tier 1 (Investor) and Tier 1 (Entrepreneur) categories, however, the opposite has 
been true. We have witnessed the government ‘rolling out the red carpet’ 
for those willing to invest in the UK and these routes have seen a respective increase of 61%1 and 95%2 in the number 
of applications made in the past year. Further limitations to the ‘company sponsored’ Tier 2 route are expected in 2012 and as these conflict with plans to increase the UK’s reputation as a global finance hub, it seems likely that this increase in the use of the Tier 1 (Investor) and (Entrepreneur) routes will continue.


The Tier 1 (Investor) route is designed to accommodate individuals wishing to make an investment of at least £1m into the UK economy. In a bid to encourage inward investment into the UK, the government is seeking to make this a more attractive route for high-net-worth individuals. If approved, a Tier 1 (Investor) will initially be granted leave to enter or remain in the UK for three years during which time they are free to take up employment, though work as a doctor or dentist in training is restricted.


An applicant must score 75 points for attributes by demonstrating that they:

  • have money of their own held in a regulated financial institution and disposable in the UK amounting to 
no less than £1m; or
  • the applicant owns personal assets which, taking into account any liabilities to which they are subject, have a value exceeding £2m; and
  • the applicant has money under their control held in a regulated financial institution and disposable in the UK amounting to no less than £1m, which has been loaned to them by a financial institution regulated by the Financial Services Authority (FSA).

Applicants must provide one or more documents showing that they have held the funds covering three consecutive months in the period immediately before the application and that the funds are freely transferable to the UK. If the money has not been held in the bank account or portfolio for three months or more, the applicant must always provide evidence of the source of the money.

Applicants can also rely on money held jointly or solely by the applicant’s spouse, or unmarried or same-sex partner, providing there is evidence to establish the relationship and evidence that the partner gives their permission to the applicant to control their money in the UK.

Applicants who intend to borrow money from an authorised financial institution, and are pledging the investment as security must demonstrate they have a personal net worth of at least £2m. Note that applicants may not mix personal and borrowed funds to meet the total £1m investment required for the award of 75 points.

Tier 1 investors are not required to demonstrate English language ability or provide separate funds for maintenance. However, under the current settlement consultation, the government is proposing to introduce a requirement for investors and their dependents to prove sufficient English language skills.


As long as the investor can show that an investment of at least £750,000 was made within three months of their arrival in the UK, their leave should be extended for a further two years. This money needs to be invested in the UK in either government bonds, or share or loan capital, which must be in an active trading UK registered company, other than those principally engaged in property investment. The investment must be maintained and fluctuations in valuation must be corrected by the next reporting period.

Changes which would limit the amount of time a Tier 1 (Investor) would be permitted to stay in the UK to a maximum of five years, are currently being consulted on, however it seems unlikely that this will come into force as the government itself has acknowledged that to do so would be detrimental to those who are making a significant contribution to the UK economy.


Changes to the rules regarding settlement for Tier 1 (Investor) migrants were introduced in April 2011 in an attempt to make this route more attractive to migrants. An accelerated scheme is now in place whereby an applicant investing a specified sum should qualify for permanent settlement, or indefinite leave to remain, faster than they otherwise could.

The reduced settlement periods are 
as follows:

  • Those investing £1m will be entitled to apply for indefinite leave to remain after five years of continuous residence in 
the UK;
  • Those investing £5m or more are now entitled to apply for indefinite leave to remain after only three years of continuous residence in the UK; and
  • Those investing £10m or more are now entitled to apply for indefinite leave to remain after only two years of continuous residence in the UK.

The usual requirement that no more 
than 90 days is spent out of the UK in 
any 12-month period has also been relaxed to no more than 180 days, accommodating those required to travel frequently.


The accelerated time frame above only relates to the settlement process. Different requirements govern the naturalisation process.

As it stands, to qualify for naturalisation, an investor must have been in the UK for five years and must have settled status for at least 12 months. The number of days of absences allowed are:

  • No more than 450 days during the five year period; and
  • Not more than 90 days in the last 12 months of the full year period.

Until the rules on citizenship are changed for investors, applicants should ensure that they spend sufficient time in the UK to qualify for citizenship.

With 1263 applications made in the three months from July to September last year, the Tier 1 (Investor) category provides the UK with a valuable source of investment, and, at present, consideration is also being given to relaxing some of the evidential requirements that could open up this route to even more individuals.


The Tier 1 (Entrepreneur) route is designed to accommodate individuals wishing to undertake business in the UK. The number of applications made in this category almost doubled in the past year4 and this trend is likely to continue. As with the Tier 1 (Investor) route, the applicant must score 75 points for ‘attributes’, however the applicant must also score mandatory points in respect of English language and maintenance. Leave will be granted for an initial period of three years after which an extension application may be made.

Points can be scored by having:

  • access to not less than £200,000; or
  • access to not less than £50,000 from registered venture capital firms regulated by the FSA, or UK entrepreneurial seed funding competitions (listed as endorsed on UK trade and investment website) or UK government departments, and made available by the department(s) for establishing or expanding a UK business; and
  • the money is held in one or more regulated financial institutions; and
  • the money is disposable in the UK. Funds held in the UK must be held in an institution that is regulated by the FSA. If the funds are not held in the UK, all of the £200,000/£50,000 must be freely transferable to the UK and convertible into pounds sterling.

Pairs of entrepreneurs are also able 
to access the route without the need 
for increased levels of funding as long 
as both entrepreneurs have equal 
access to the required funds. Third 
parties (ie family members and/or 
other investors or corporate bodies) 
may also provide money to make up 
the required funds.


A Tier 1 (Entrepreneur) applicant wishing 
to extend their visa must demonstrate 
the following:

  • That they have invested, or had invested on their behalf, not less than £200,000 (or £50,000 if they were awarded points for funds of £50,000) in cash directly into one or more businesses in the UK;
  • Applicants must, no earlier than three months prior to the date of application and within six months from the date of entry, have:
  • registered with HMRC as a 
self-employed person; or
  • registered a new UK business with the applicant as a director; or
  • registered as a director of an existing UK enterprise.
  • That they have established a new business that creates the equivalent 
of two full-time jobs (ie 30 hours a 
week minimum) for people settled in 
the UK or takeover a business with similar job creation.
  • At the time of the extension application, the candidate must be engaged in business activity.

There is no need to show that a business is profitable, but money must be fully used in the business (ie benefitted from the cash investment) and not simply held in a bank account. Money invested into a residential property will not be taken into account.


An accelerated settlement process is also in place for Tier 1 (Entrepreneur) and reduced periods of residence are dependent on an applicant’s level of investment and business activity in the UK.

The continuous residence period is three years if:

  • their business has created at least ten new full-time jobs for settled people; or
  • they have established a new UK business that has had an income from business activity of at least £5m during a three-year period while they have been in the UK under Tier 1 (Entrepreneur); or
  • they have taken over or invested in an existing UK business, and their services or investment have resulted in a net increase of £5m in that business’s income from business activity during a three-year period while they have been in the UK under Tier 1 (Entrepreneur), compared to the immediately preceding three-year period.

The continuous residence period is five years in all other cases.

Applicants must show that they are engaged in business activity at the time they apply for settlement. They must also meet all other requirements of the immigration rules in place at the time 
when they apply for settlement.

As with Tier 1 (Investor) migrants, applicants cannot be outside the UK for more than 180 days in any 12 calendar months. The continuous residence period can include time spent in the UK as a business person or an innovator.

The rules governing British citizenship are the same as those listed above for 
Tier 1 (Investor) migrants.

Although a lesser sum is required, the Tier 1 (Entrepreneur) route is more onerous in terms of the type of evidence required 
for initial and extension applications. Further, given the implications under commercial, tax and employment law, applicants are advised to seek independent advice before entering the UK under 
this route.


As the government seeks to hit its 
target on net migration it seems likely that further caps and restrictions will be imposed. Under the settlement consultation the government is proposing to further restrict permanent residency for those in the Tier 2 category and it seems highly likely these proposals will come into effect. This would limit migrants in all Tier 2 categories to a maximum five-year stay in the UK. Conversely, as the government looks to expand the City’s role in global trade with, for example, plans for London 
to become the major offshore trading 
hub for the Chinese Renminbi, it seems that immigration will inevitably increase. With this in mind the Tier 1 routes outlined above provide a viable alternative for high-net-worth individuals, such as CEOs, who are looking to live and work in the UK and who want to have the option to relocate permanently.