This article was first published in June 2018.
In June 2018, the UK Government announced plans to introduce a new UK Start Up Visa from Spring 2019.
This is hugely positive news for the UK.
To remain globally competitive and to achieve growth potential in core sectors such as tech, Britain has to be in a position where we are welcoming foreign talent, their ideas, investment and contribution. But current UK immigration rules simply don’t support this.
A new and well-aligned visa scheme is exactly what’s needed to make the UK a more attractive and accessible destination for foreign talent and investment.
It’s a mature policy move on the part of the Government, and largely unexpected given its mandate to ‘clamp down’ on immigration (economic migration included) and its dogged approach to hitting that magic (arbitrary) level of 100,000 net migration.
But in this instance, it seems the Government has listened to UK business.
Why the UK needs the Start Up Visa
Under current rules, any non-EEA or Swiss national wanting to set up a business in the UK will be required to apply to the Home Office under the Tier 1 route for permission to enter and remain in the UK to carry out the permitted activity. Tier 1 comprises a number of different visas, with different eligiblity criteria and carrying different visa conditions:
The number of Tier 1 applications shows there is a clear appetite among foreign business people to set up in the UK. In the first quarter of 2017, a record number of investor visa applications were made and with recent figures showing the dominance of London in European tech – we remain a hub. Brexit does not seem to be dampening UK prospects among talented and wealthy individuals.
Tier 1 visas are however extremely limited in their eligibility, and refusal rates are notoriously high; 42% of Tier 1 Entrepreneur applications are refused, for many reasons we have discussed previously. Of note however is that this is the highest refusal rate of any UK visa category outside of asylum applications.
As such, many individuals who could potentially make a valuable contribution to the UK economy through their enterprises are precluded from being granted a visa to set up in the UK, falling foul of current Home Office decision-making protocol and arbitrary criteria.
Add to this figure those individuals who decide not to incur the expense and effort of making the Tier 1 application through concern of an eventual refusal.
This is where the Start Up visa needs to step in – opening up the opportunity to set up in the UK to a broader range of applicants – including non-graduates – where they meet the requirements of setting up a viable business.
What will the new UK Start Up visa look like?
Under current proposals, the Start Up Visa will be available to individuals who want to set up business in the UK, whether or not they have a university degree.
The new visa is being designed to encourage more foreign entrepreneurs to come to the UK and contribute to the British economy, with particular ambitions to accelerate growth in sectors such as tech.
We expect the new Start Up Visa to operate along the same lines as the Tier 1 Exceptional Talent scheme, which is hugely popular – particularly in tech.
As with the Tier 1 graduate entrepreneur visa, the Start Up Visa will require endorsement, but the list of approved endorsers is being broadened to include business sponsors, as well as universities.
Applications are likely to centre on the credibility of the individual applicant and their business idea. This is an important distinction, as under present rules, it is the Home Office case worker who decides if a Tier 1 Entrepreneur applicant has what it takes to make their business idea work – which has long been a source of criticism of this route.
The benefit of this new visa is that decision-making for the business viability requirement will be addressed by qualified, experienced and more appropriate parties – ‘business sponsors such as accelerators’, according to the Government announcement. By placing the business viability decision-making within industry, the Government is clearly acknowledging that case workers and civil servants are not best placed to make this assessment effectively.
As a result, Home Office decision-making is expected to become ‘faster and smoother’ with the business viability requirement being taken away from case workers to be dealt under the preliminary endorsement stage.
Will the UK Start Up Visa ‘open the floodgates’?
The introduction of any new visa route is usually accompanied by grumbles over potential misuse and abuse.
From experience however, this rarely happens.
All applications for the new visa will remain subject to Home Office scrutiny in respect of each applicant’s immigration history, good character, source of funds etc. The safety net will remain in place, and any concerns should not detract from what we expect will be a hugely positive step forward for the UK economy.
Do you have a question about the UK Start Up Visa? We can help!
Further details of the new Start-Up route have since been released in advance of it opening on the 29th March 2019.
At DavidsonMorris, we work with foreign entrepreneurs and investors every day. We are extremely passionate about the contribution of foreign talent and its role in shaping and growing the UK economy.
The UK Start Up Visa needs to be a key enabler for growth and identity as we assert our global proposition as a hub of innovation.