A senior government adviser has suggested that high net worth individuals who are looking to get visas to reside in the UK, from countries such as China, should be encouraged to invest in start-up businesses.
Professor Sir David Metcalf has proposed significant reforms to a government visa scheme that allows foreigners who invest a minimum of £1m to live in the UK but does not give them access to a UK passport.
Sir David, who is Chairman of the Home Office’s Migration Advisory Committee (MAC), is suggesting that the Government adapts the scheme so that the money from these individuals is invested in fledgling firms, thereby benefitting the economy as well.
Currently, under the “tier 1 investor” scheme, wealthy foreigners who want to live in the UK must prove that they have £1m, £5m or £10m to invest, 75 per cent of which must be ploughed into either Government gilts or share capital in UK registered firms.
Apparently, most of these individuals prefer to invest in gilts, as if the value of their shareholding in a company drops below the various financial thresholds, they are forced to top up the value of their investment. However, if Sir David’s proposal were to be adopted, then the topping-up rule would be redundant.
In addition, he argues, although investments in start-ups are more difficult to value, encouraging wealthy individuals to pursue that route would potentially benefit the economy more than putting their money into gilts and, given that almost 1,6000 investor visas were granted to such people in the 12 months to the end of September, the benefit could be substantial.
The MAC has put its suggestions forward to the Home Office for consideration by Home Secretary Theresa May.