Maurice Turnor Gardner’s Anna Gaston states that a crackdown on tax-avoidance and new rules seem to suggest that Britain has become unattractive to HNWs who are from overseas.
The Home Office on the 27th of August 2015 published information on the quantity of visas for investors which had been approved after they were made available since 2008, and in the process it was able to give a confirmation of a huge reduction in their requests in the year 2015.
The programme for the visas for investors permits individuals who have high networtj to have their route to citizenship of Britain fast tracked if they can decide to embark on making a financial investment of a substantial amount in the United Kingdom. For families which are wealthy and were desiring to permanently settle in the United Kingdom this used to be an option that was attractive.
However, ever since the end of year 2014 when there were changes made to the rules the route for the visas for investors appears to be no more as attractive to the investors who are financially savvy and highly mobile which were being attracted by the United Kingdom.
The figures from the Home Office reveal that in 2015’s second quarter there was only an approval of just 44 visas for investors, unlike the approval of 251 for 2014’s second quarter. This is a reduction of more than 80 percent. The trend set in 2015’s first quarter when just 58 of such visas were approved only got worsened by these statistics, when compared to 2014’s first quarter during which an approval was made for 213 visas.
The reason for this downturn could partly be as a result of revisions made to the rules for the investor visas which have affected all the requests that were submitted by or after the 6th of November 2014. One of these changes is that the smallest amount of financial commitment was increased by two times to £2million from £1million and it is expected to be kept throughout the visas entire duration.
In order to be deemed eligible for a visa for investors, an applicant should place into UK investments that are deemed to be qualifying an amount of at least £2million. Based on the rules which are new it is not required that the investor should make top-ups assuming there is a reduction in the investments’ value. However, proceeds from sales should be put back into investments deemed to be qualifying.
Those with visas for investors would in return be selected as eligible to have their visas extended, provided they meet other conditions as well. Ultimately, they would be allowed to make applications for leave to stay indefinitely after five years and after six years for the British citizenship if they meet the requirements for residency. An acceleration can be made to this process by the making of additional investments of either £10million or £5million.
The programme for investor visas had been looked at from the perspective of the economy of the United Kingdom as a win-win, bringing in the highly needed inward investment to the United Kingdom Plc and serving as an attraction to the shores of Britain of individuals with high net worth (also to the tax net of HMRC).
Perhaps it seems as if the rules which are new added to the attempts by the government of the United Kingdom to crack down on avoidance of tax which was being perceived and the rhetorics which were highly charged with regards to non-doms, which has made the visa for investors an option that is less attractive unlike what is being offered by other countries. Most countries in the EU now give a type of citizenship which is based on investment, which is what the United Kingdom is going to have to compete with. Costing for as much as £2million, the United Kingdom’s visa for investment is ranked as one of the EU options that are very expensive.
However, the United Kingdom visa for investor has some benefits which are above others that exist inside the European Union, for instance, the process involved has certainty and the British citizenship route. In addition, the invested £2million (in addition to any accruals earned) would stay as the investor’s property all though and is not required to make any type of HMRC donations.