Settling in the UK—Looking at Visa Routes and Tax Considerations

For the past decade, the UK has proven an attractive destination for private individuals and families looking to invest, live or work here. The country’s relative political stability, education system, and professional services infrastructure remain appealing factors.

Over the last two years, however, we’ve seen a significant change in the immigration landscape for investors, culminating in the shock closure of the Tier 1 Investor route to new applicants in February 2022. The route was closed without notice—an extremely rare move—and has yet to be replaced, despite the loss of around 300 new applicants per year each investing no less than £2 million ($2.4 million) into the UK.

On a macro level, there is a global move away from purely passive investment-based migration routes towards routes focusing on active investments leading to tangible benefits, such as job creation or business growth. The UK is broadly in step with this trend, but currently lacks a truly attractive immigration route for overseas investors and entrepreneurs, leaving high-net-worth families wishing to relocate with fewer obvious options.

Visa Options

Skilled Worker

For many, the solution might be the skilled worker visa, which requires sponsorship by an active and trading UK company with at least one British or settled employee. The sponsored worker can live freely in the UK, but their primary work must be for the sponsoring UK company, although there are limited provisions for “supplementary” work outside of this role.

While this may sound limiting, there is the potential for individuals to explore establishing an active company in the UK (for example, an investment arm of an overseas entity) which then can sponsor overseas employees, including the individual, provided there is a genuine vacancy and commercial need for the UK roles. Seeking immigration and tax advice is important when exploring this option, as there are a number of compliance matters to consider.

Expansion Worker

An alternative option is the expansion worker visa, which is designed for entrepreneurs with an overseas business looking to establish a presence in the UK. In contrast with the skilled worker route, there is simply a requirement to establish a UK “footprint” for the sponsoring company, rather than an established trading presence, and no requirement to employ a British or settled worker. Although potentially easier to set up initially, this is a “gateway” visa for the UK, which ultimately requires the applicant to switch into the skilled worker route within two years.

Global Talent Visa

Those who are exceptional leaders in the arts and culture, science or tech sectors may wish to explore the UK’s global talent visa. While restricted to applicants who can evidence genuine high-value achievements in their field, it is an attractive option for those with the right profile. Currently the most flexible visa for the UK, applicants can work for anyone or establish their own company, and it can lead to permanent residence after only three years’ residence in the UK.

There has been an increase in applications from those in the tech sector in particular, with more successful applicants in 2022 than any year before. The tech route isn’t limited to those who might be considered “typical” technical applicants—such as coders or web developers—and is open to investors or company leaders in the tech space provided they can demonstrate an active and successful track record in the growth or scaling of tech companies.

Tech Nation, the independent endorsing body which assesses global talent applications in the tech sector, recently announced it will start winding down operations from March 31 due to funding issues. A new endorsing body is expected to be appointed in due course, although this is yet to be confirmed.

Innovator Visa

For international entrepreneurs and investors, the nearest possible comparison to the closed investor route is the innovator visa. Unfortunately, it hasn’t proved fit for purpose, and significant changes to the route were promised by autumn 2022 but didn’t materialize. Home Office consultation with stakeholders is likely to take place ahead of further decisions being made on a possible replacement for the investor visa route, although the time frame is still open. As other countries have viable investment-based routes already in place, it’s crucial for the UK to develop one to stay competitive and attractive to foreign investors.

Tax Implications

Anyone looking to settle in the UK or establish a company via the routes outlined above must carefully consider all the individual and corporate tax implications associated with the relocation. As a broad rule, individual tax liability is heavily influenced by physical presence in the UK, so it is vital that tax and immigration advice is sought concurrently when planning the timing of a relocation.

Importantly, if an individual wishes to obtain permanent residence in the UK, they will need to spend over half of their time each year in the UK (typically for a continuous period of five years). This will almost certainly create tax questions to consider, so it is crucial to obtain early strategic advice if the plan is to make the relocation permanent.

Holistic advice on how to structure a proposed expansion to the UK—from both a personal and company tax perspective—is critical.

Going Forward

While the UK immigration landscape changed in 2022, there are still viable options for overseas investors and private families, provided they undertake the right strategic planning, with the hope that a revamped investment route may offer further possibilities in 2023 and beyond.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Alexander Hood is a manager and solicitor based in Fragomen’s London office, with 10 years of experience in UK immigration law. He advises clients on complex immigration matters, citizenship and residence by investment matters across multiple jurisdictions.