Why the new Tier 1 Start-Up Visa will be good for Entrepreneurs

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Jack Gevertz is a writer for the Immigration Advice Service; an organisation of UK immigration lawyers  which provides legal support for those looking to migrate to the UK or hire overseas workers.

For an entrepreneur wanting to start a business in the UK, the process of doing so is about to change. A new Tier 1 Start-Up Visa is due to launch at the end of this month.

It follows the ending of the ‘Prospective Entrepreneur’ Visa which was withdrawn by the Government last year. This visa was useful for entrepreneurs because it allowed them to come into the country and organise their funding arrangements before making an application for the Tier 1 Entrepreneur Visa. 

In the last few days, the Government has announced the Tier 1 Entrepreneur Visa will cease from the 29 March. The Immigration Minister Caroline Nokes described it as contributing ‘little to the economy’. 

Refusal rates for such visas are very high. The Government has tried to make it harder for someone coming in on this visa to do so because of concerns that it was being abused. In 2013, the ‘Genuine Entrepreneur Test’ was introduced, and then changed again in 2015 in a bid to make meeting the criteria far more difficult. That has meant half of all applications made for a Tier 1 Entrepreneur Visa have been refused. 

One case that was brought to a tribunal in 2017 challenged the interview technique the Home Office applied when carrying out its test for this visa. It found the process did not allow for ‘clarity’ to be provided to questions and could therefore be seen to be unfair. It means any decision based on this type of interview could also be ruled unlawful.

The consequences of this decision mean we may have potentially refused hard-working entrepreneurs who wanted to make a difference to British society and contribute to the economy. However, under the new visa, the Home Office won’t be involved in assessing applicants as they will be looked at by business leaders and approved bodies who will be in charge of making sure the ideas are executable.

The other visa that will also be scrapped is the Graduate Entrepreneur Visa. Applications for this can be made until 5 July. In the changes to the Immigration Rules outlined on 7 March, the Government said the new Start-Up Visa would be an ‘expansion’ of the Graduate Entrepreneur Visa. And it does look set to be a lot better. 

The first point to note is that the new Start-Up Visa will be opened up to everyone instead of just university graduates, meaning the UK will have access to people who have different life experiences and skills. That should mean the breadth of businesses in the UK will be improved.

It also widens the sponsor list, and includes a greater number of approved bodies than the previous visa did. This means it’s more likely that your offer to set up a business in the UK will be approved. In addition, those who can show support from one of these endorsements will be allowed to come to the UK to begin discussions on securing funding. This will make it easier for entrepreneurs to really consider their business needs and come to an appropriate arrangement with their sponsor. 

Those wishing to come to the UK on the new Start-Up Visa should be warned though that their right to do so could be curtailed if their endorser withdraws from their business or shuts down. It is important for those considering this visa route to take this into account if they are applying with an endorser who is struggling financially or new to the market.

The other big benefit is those applications that are approved will grant entry into the UK for two years instead of the previous one year. This means there will be more time to grow and develop your business. After your two years has lapsed, there is the chance for progression on to an Innovator Visa. If an applicant does decide to pursue this progression, they will not be required to show any proof of funding when doing so, so as long as the business has already shown success. The great thing about moving on to an Innovator Visa is it opens the prospect of being able to settle in the UK.

No initial funding needs to be supplied when applying for a Start-Up Visa. However, applicants will need to supply evidence of maintenance and living funds, unless the endorser has agreed to a minimum of £945, then evidence of their maintenance funds do not need to be supplied.

Even though no initial funding needs to be supplied, there will be some costs when just making an application. Applicants will, for example, be expected to pay £363 to make the application for a Start-Up Visa and they will also be expected to fund the Immigration Health Surcharge. This will cost £800 for the two years they are allowed to be here. This means simply putting in an application would cost £1,163. 

Every applicant needs therefore to think about their business proposal and whether it is sustainable. Having to re-submit, for example, could prove arduous and expensive.

However, the importance of a successful business idea cannot be overstated. Small businesses contributed a huge £1.9 million to the UK economy in 2016. They support local communities, create jobs and boost people’s quality of life. 

The Government has now done its bit in making the process for entrepreneurs far better and simpler, now it’s over to the entrepreneurs themselves to take advantage of the changes, and work towards setting up a successful business in the UK which will be to the benefit of all of us.