• Significant Changes to Skilled Worker and Tier 1 Entrepreneur and Investor Categories Expected April 6
  • April 7, 2015
  • Law Firm: Fragomen Del Rey Bernsen Loewy LLP - New York Office
  • The Home Office has announced several changes to the UK’s Immigration Rules which will take effect April 6, 2015, including a higher minimum salary level for Tier 2 work visas, consolidated visitor visa categories and stricter rules regarding proof and expenditure of funding. Additionally, fifteen visitor visa categories will be consolidated into four categories, without notable changes to the substance of the related rules and timeframes. A summary of the changes and their impact is below.

    Tier 2 Minimum Salary Level Increase

    Workers entering in Tier 2 must be paid at least the minimum salary for their visa category or the minimum salary for their particular job, whichever is higher. The new Rules amend both standards.

    The Tier 2 minimum salary levels for each visa category are increasing by 1.2%, in line with wage inflation. A Long Term Intra-Company Transferee, for instance, will need to be paid £41,500 - an increase of £500.

    Salaries for particular jobs (known as SOC codes) will also increase. An experienced IT business analyst will need to be paid £33,000, up from £31,200. A software developer will need to be paid £31,100, up from £29,600. These new salaries are based on typical wages paid to UK workers in each job.

    Elimination of Cooling-Off Period for Some Tier 2 Assignees

    The cooling-off period prevents a Tier 2 assignee from returning to the UK with a new Tier 2 visa for twelve months from the date of expiration of their last visa. Otherwise, the assignee can demonstrate that he or she left the UK and the cooling-off period will begin from the date of their departure. The current rule applies equally irrespective of how long the Tier 2 migrant spent in the UK, with limited exemptions.

    The new Rules are expected to add an exemption for those who have not held a Tier 2 Certificate of Sponsorship issued for a period of three months or more in the twelve-month period preceding a Tier 2 application.

    Anticipated Health Surcharge

    Non-EEA nationals applying for a Tier 1, Tier 2, Tier 4 or Tier 5 visa of more than six months’ duration are expected to be subject to a health surcharge for each year of visa status. The surcharge is expected to be £200 for each year of visa validity. A reduced rate will apply to students, and intracompany transferees are expected to be excluded.

    The Home Office has made a technical change to allow Exceptional Talent applicants to request visas of less than five years. The change appears to have been made in anticipation of the health surcharge, suggesting that an announcement may be imminent.

    What This Means for Employers and Foreign Nationals

    Employers of Tier 2 applicants should work with their administrative department to ensure compliance with increased minimum salary levels.

    Foreign nationals no longer subject to the cooling-off period will be able to travel freely into and out of the UK once the policy changes are implemented.

    Fragomen is monitoring the status of the health surcharge provision and will report any developments.

    The following changes are expected to be implemented to the Tier 1 (Entrepreneur) and Tier 1 (Investor) categories:

    Increase in Evidence and Restrictions for Tier 1 (Entrepreneur) Applicants

    Initial applicants must now submit a business plan. Previously, this was not a mandatory document, but was often requested to help applicants demonstrate a genuine intention to set up a UK business.

    Applicants relying on their own funds to set up a business must provide evidence of the third-party source of those funds if they have held the funds for less than 90 days prior to their initial application.

    A change is being made to the provision for applicants with business funding from a UK or Devolved Government Department to make it clear that government funding by an intermediary public body may be acceptable, as long as that body confirms that the funds were made available for the purpose of establishing or expanding a UK business.

    Applicants for Tier 1 (Entrepreneur) extensions and indefinite leave to remain will be subject to a genuineness test which is similar to the genuine entrepreneur test currently in use for initial applications.

    Restrictions will be imposed on Tier 1 (General) Migrants who seek to switch into the Tier 1 (Entrepreneur) category, unless they have already established a UK business before April 6, 2015, or they have funding from a government body or an endorsed funding source, as listed on the UK Trade & Investment website.

    Tier 1 (Investor) Category Constraints

    Prospective investors will be required to open a UK-regulated investment account before making an initial application. This change will ensure UK banks carry out due diligence checks on investors who apply for entry clearance or leave to remain.

    The minimum age of applicants will increase from 16 to 18. This change reflects the notion that it is not normally possible for 16- and 17-year old applicants to be wholly in control of their own funds and investments.

    Applicants will no longer need to invest additional capital if they sell part of their investments at a loss, but they will be required to maintain all their capital within their investment portfolios. Applicants will still be able to buy and sell investments as long as the investor does not withdraw any capital. This change is intended to remove an unintended incentive for investors to invest in UK government bonds rather than UK companies.

    Clarifications Expected for Both Categories

    Due to increased queries, clarifications are expected to be made to the investment spending rules. In particular, investment in companies concerned with property investment, development or management is expected to be further restricted. The underlying principle is that business income should be generated from the supply of goods and/or services, rather than from the increased value of property or any income generated through property, such as rent income.

    Lastly, the Home Office is expected to make minor technical changes to evidential requirements.

    What This Means for Employers and Foreign Nationals

    Potential Tier 1 (Entrepreneur) applicants should plan ahead to ensure they can present valid proof of the source of their funds, should develop a business plan, and should ensure that they continue to meet the necessary criteria as a “genuine” entrepreneur throughout their stay in the UK, as well as for extension and indefinite leave to remain applications.

    Potential Tier 1 (Investor) applicants should contact their immigration professional and banking institution to ensure the bank is able to provide the additional required evidentiary information. Applications may now take longer to prepare given the requirement to open a UK bank account in advance.