Many successful and wealthy individuals and families look for the opportunity to migrate their residence and citizenship every year. Figures provided by Henley & Partners suggest that almost 110,000 HNW and UHNW families migrated in 2019.
- Source 1: Office for National Statistics (ONS) - Migration Statistics Quarterly Report: November 2019
NB: A summary of the latest official long-term international migration statistics for the UK for the year ending June 2019 published by the Office for National Statistics (ONS). Data from the Home Office, the Department for Work and Pensions (DWP) and the Higher Education Statistics Agency (HESA) are also included.
- Source 2: Henley & Partners - Press Release on the Surge of Covid-Related Interest in Investment Migration from Citizens of Developed Nations
China, India and Russia are amongst the leading countries that migrants left and the Canada, Switzerland, the UK and Australia were amongst the leading destinations of choice for these individuals, with smaller nations including Cyprus and Malta also proving popular destinations.
Many of these countries offer so called residence and citizenship by investment programmes - often providing the right to remain, become a citizen and apply for a passport in return for an investment in the economy either in businesses or property. Residence and citizenship programmes often go “hand in hand” with tax incentives such as the UK’s resident non domiciled tax regime with both Italy and Greece offering similar schemes.
However, citizenship by investment programmes are not without controversy as it has been claimed that they can make it easy to launder money and for criminals to obtain European passports. In October 2020, the Cyprus “golden passport” scheme which offers citizenship and an EU passport in return for an investment in the Cyprus economy of € 2m was suspended following allegations made by the news network Al Jazeera.
The move comes after an Al Jazeera investigation showed that politicians were willing to help criminals acquire passports. It is likely that other citizenship by investment programmes including those offered by Malta, Montenegro and Portugal will come under scrutiny.
- Source 3: Al Jazeera - News Article about Cyprus abolishing citizenship through investment programme
The UK Tier 1 investor visa programme has not been without controversy. In December 2018, it was widely rumoured that the Tier 1 programme was to be suspended but the Migration Policy Team at the Home Office announced the following:
"The Tier 1 (Investor) visa is not currently suspended. However, the Government remains committed to reforming the route. A further announcement will be made in due course. Any suspension would be implemented through changes to the Immigration Rules.”
Source: UK Government Website
Official statement released by the Migration Policy Team of the Home Office on Tuesday, 11 December 2018, clarifying that the Tier 1 Investor visa was not suspended.
Subsequent changes were made to the rules in 2019 and currently to apply for permanent settlement (known as 'indefinite leave to remain') in the UK after 2, 5 or 10 years it is necessary to make a qualifying investment in the UK economy as follows:
Apply after 2 years = £10m
Apply after 3 years = £5m
Apply after 5 years = £2m
Once permanent settlement has been granted it is then possible to apply for a British passport.
The investments must be made into share capital or loan capital (for example, corporate bonds) in active and trading UK registered companies, other than those principally engaged in property investment, property management or property development; or pooled investment vehicles which receive funding from the UK government or a devolved government department or one of its agencies. UK Government bonds no longer qualify.
The UK also offers the attractive resident non domiciled (RND) tax system to new arrivals. Under this system, the RND has to pay tax on UK source income and gains only providing the income and gains arising outside the UK are not bought into (remitted) to the UK. After 7 years the benefit of this remittance basis comes at a cost starting at £30,000 (p.a.) and after being resident in the UK for 15 out of the previous 20 tax years, the remittance basis is no longer available. Assets held outside the UK can also be outside of UK inheritance tax which is charged at 40% on death on UK located assets and on worldwide assets for individuals who are domiciled in the UK.
Investment held under the Tier 1 investor visa programme cannot be held outside of the UK and therefore income and gains arising are taxable in full.
Tax benefits may vary as a result of statutory charges and their value will depend on individual circumstances. Specific risks associated with particular investments are detailed on this website and in our printed literature.
It is important if you are thinking of applying for a tier 1 investor visa that you can prove that you have the required amount (£2m, £5m or £10m) available and ready to bring into the UK (if it is not already in the UK). If you are relying on money held in a joint account them you must have proof from your husband/wife/partner etc. that the money is available for your Tier 1 Visa and also proof of your relationship.
If the money is not held in pounds sterling (£) then you must convert it’s value into £ on the application form and if it is held outside the UK then it must be readily available to transfer into the UK so watch out for currency controls. If you have not held this money for two years, then you will need to be able to prove where it came from e.g. a gift.
You must also open an account with a UK regulated investment manager in order to deposit the money and this manager will have to provide a letter to the UK Home Office confirming certain things such as your name and account number and that you have opened an account in the UK with not less than £2m to invest in the UK and that the bank has carried out all due diligence and know your customer checks.
How can Rosecut Help?
Rosecut can help you to prepare for your Tier 1 investor visa application and has up to date information on many of the citizenship by investment programmes which we are happy to share with you. We also work closely with many of the specialist advisors in this area and are happy to make introductions.
Rosecut also supports our custodian WealthKernel with the management of Tier 1 investor visa portfolios and portfolios for RNDs and we are very familiar with the tax rules and the avoidance of investing in non-UK situs assets.