The UK’s system of granting special visas to high net worth (HNW) individuals is set to change in February. Until now, any overseas national investing £1m in the UK, or showing that they had a personal net worth of £2m plus a £1m loan from a British bank could obtain an Investor Visa (or a Tier 1 Visa, to give it its official name).
The number of such visas issued has more than doubled between 2010 and 2013. In 2010-2011, 235 Investor Visas were issued; in 2012-2013 there were 530. Around one third of those were issued to Chinese nationals; next come Russians and then Americans.
But the system has come in for criticism, because in many cases the £1m investment amounts to little more than a loan and brings no long-term benefit in itself to the UK economy. Professor Sir David Metcalf, Chairman of the Government’s Migration Advisory Committee (MAC), said that many of those receiving Tier 1 Visas buy gilts which they then sell on after three or five years; they obtain British citizenship, but the UK economy has not gained.
Professor Metcalf said that as the UK is selling £300m worth of gilts each day to fund the budget deficit, an individual buying even £10m worth which he will later sell is making no real difference. He added, “If there are 500 investors in the last figures, only some 50 or 100 of those really carry out proper entrepreneurial activity; that, I think, is where the benefit for Britain is.”
It is believed that when the MAC issues its report in February, there may be two possible recommendations to change the system. Investors could simply buy UK citizenship. This is an option currently being considered by the Government of Malta and the Committee believes it is worth looking into. Another way being examined for HNWs to receive an investor visa and ultimately UK citizenship would be for them either to donate or make an endowment to a UK hospital or university.
It seems certain that the Committee will make some recommendations to this effect which will change the way in which Tier 1 Visas are issued. What is not yet clear is whether there will be any sort of list of which institutions should benefit from such a change.
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