After 6th April 2015, changes to the immigration rules for Tier 1 Investor and Entrepreneur Visa applicants announced by the Home Office will come into force. Furthermore, how applicants are taxed has also changed as there are increases to the remittance basis charge. This post gives you a quick guide to these changes and how they will apply to Tier 1 Visa applicants.
Tier 1 Investor Visa applicants
Several of the changes to investor visa applications will require some forward planning on the part of applicants.
Firstly, there is a new requirement that applicants must open a UK bank or investment account before applying for the visa.
In practicality, this will mean that applicants may need to spend more time in the UK prior to their application in order to open an appropriate account. In addition, the time needed to process the opening of the account will also have to be considered.
The other change to investor visa applications addresses a historic problem with reapplying for an investor visa.
Previously, would arise where the visa applicant invested in qualifying investments but subsequently failed to notice that they had dropped in value below the required amount.
This meant that the investor’s application to renew the visa could be rejected on the grounds that the applicant had failed to hold the minimum investment for the duration of the visa.
This problem could be avoided by ‘topping up’ the qualifying investment with additional funds. However, this could potentially create adverse tax consequences – bringing foreign income or gains to the UK post-arrival can be a taxable remittance.
However, the Home Office has announced that from 6 April 2015 there will be no need to top up the qualifying investment, where the investment goes down or it is sold at a loss.
The one provision to this is that the gross proceeds must be reinvested in a new qualifying investment before the end of the next reporting period, or six months from the date of disposal.
It is also important that tier 1 applicants ensure they bring in enough tax-free capital upfront, to pay for the projected expenses. The capital of the qualifying investment cannot be used to pay investment management fees, UK taxes or any other charges, which may arise.
Interest or dividends on the qualifying investment can be removed from the investment account and used however the applicant deems appropriate, for example to pay tax.
Tier 1 Entrepreneur Visa applicants
The rules relating to Entrepreneur Visa applicants are to be tightened as of 6 April. Applicants will now require a detailed business plan as well as demonstration of a genuine intention to create jobs.
Remittance basis charge
There will also be changes to how wealthy migrants who do not intend to make the UK their permanent home, are taxed. The types of migrants are commonly known as ‘non-doms’.
Foreign income and any gains earned before the non-dom’s arrival in the UK can still be brought to the UK tax-free.
However, after their arrival, non-doms can elect to be taxed on the remittance basis, which means that their UK source income and gains are taxed as they arise, but foreign source income and gains are only taxed to the extent that these are remitted to the UK.
This changes after non-doms have been UK resident in seven out of the previous nine tax years, at this point they can either elect to pay tax on worldwide income and gains as they arise, or they may claim the remittance basis and pay the remittance basis charge of £30,000 a year.
However, there is no requirement to pay the remittance basis charge if the unremitted foreign income and gains are less than £2,000 per year.
Additionally, for those who have been resident in twelve out of the previous fourteen tax years, the remittance basis charge will increase from £50,000 per year to £60,000 per year.
There will also be a new band of £90,000 per year that will be payable by those who have been resident in seventeen out of the previous twenty tax years.
Specialist Immigration Advice
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