Investing in an Existing Business: is Tier 2 an Alternative to Innovator ?
On March 29th 2019 the Home Office closed the Tier 1 Entrepreneur category and replaced it with the new Innovator route. Entrepreneurs and business owners now have to apply through the new route or the Start-up visa in order to establish a business in the UK.
However, these new routes don’t allow applicants to invest money into an existing UK business.
This means that there is no longer a clear visa option for applicants looking to come to the UK to take over or invest into an existing company, as was previously permitted for Tier 1 Entrepreneur visa holders.
We’ve recently discussed this issue with some of our corporate clients, and have been looking into a solution where business investors could come to the UK under the Tier 2 category.
Can I come to the UK as an Investor through the Tier 2 Category?
Under certain circumstances, Tier 2 General can provide a suitable solution for individuals looking to invest in a business in the UK. However, to be able to do so applicants will also need to be taking up an active role in the day-to-day running of the business.
This means you would be able to invest in a company with the intent to also work in a specific job in the business, such as the CEO, Sales Director, or Senior Programmer.
You would not be able to simply purchase a UK business and leave it to operate as normal.
A further restriction within this area is that the company usually must be able to show that they are unable to recruit for your role from with the Resident Labour work force.
All Tier 2 applicants typically need a Certificate of Sponsorship from a company with a Sponsor License.
If the business the applicant is looking to invest in has not got a Sponsor License, they would need to apply for one as the first step in the process.
A Certificate of Sponsorship (CoS) would then need to be issued to the applicant to allow them to make a Tier 2 visa application. The process of obtaining a Sponsor Licence and issuing a CoS can usually be completed within 4-8 weeks at a reasonable cost.
For more details on Sponsor Licensing please see our dedicated resources page.
Are there any restrictions within this category?
In ordinary situations, Tier 2 visa holders are not able to hold more than 10% of shares in the company that is sponsoring them.
However, there is an exception to this rule. If an applicant has an annual salary of £159,600 or more, then they are classed as a high earner. High earners are able to hold more than 10% of shares in their sponsoring company.
Because of this, it is possible for an individual to operate as a director and/or investor within a UK business on a Tier 2 visa.
This is permitted within the legislation providing that the individual doesn’t own more than 10% share in the company, or if they did own more than 10% shares that they were also earning £159,600 or more a year.
Normally, a Tier 2 employer would also need to conduct a Resident Labour Market Test before offering a Certificate of Sponsorship.
This test means that an employer can only sponsor someone under Tier 2 if they have followed a robust recruitment process which has found that there are no suitable workers for the position within the EEA.
However, if a sponsor is offering a position for a high earner, meaning someone who will earn £159,600 or more each year, then this test does not have to be done.
This means if a business partnership or takeover has already been arranged, then the sponsor doesn’t have to worry about other UK residents being eligible for the investor’s position in the business.
Tier 2 General visas are granted for 5 years, after which time the applicant would be eligible to apply for Indefinite Leave to Remain (Settlement).
Once the applicant has achieved ILR, they would be able to continue running the business without restriction.
Tier 2 applicants are also able to bring dependants with them to the UK, granted entry for the same length of time as the main applicant.
If they wanted to, these family members would be freely allowed to work or establish their own business in the UK.
As this would be a relatively complex application, we advise that anyone thinking of applying for a Tier 2 visa in this manner should seek suitable advice, specific to their circumstances.
If you believe you are eligible for a Tier 2 visa on this basis and require additional information, please contact us directly through either our phoneline, email address, or online form.
For those looking to invest larger sums of money into the UK, Tier 1 Investor might be a more preferable immigration route. However, this is also a specific visa since the applicant must invest a minimum of £2 million into the UK.
Kim Day, Senior Immigration Adviser at White Rose Visas, comments:
‘Though this is only an option in certain situations, its reassuring to know that there remains the potential for business investors to come to the UK following the closure of the Entrepreneur category. We’re hopeful that in the future more visa opportunities will be created for those hoping to invest in existing UK businesses.’