Personal Immigration

Investment Options for Tier 1 Investor Visa Applicants

Tier 1 Investor visa holders must invest at least £2 million in the UK within 3 months of their arrival.  But investors should be aware that not all investments are permitted – and selecting the wrong form of investment will almost certainly jeopardise long term plans to settle in the UK.  Here we look at the qualifying investment options for Tier 1 Investors who wish to secure settlement in the UK by way of investment, as well as the forms of investment that are not permitted.

What forms of investment will qualify for a Tier 1 Investor visa?

Row 1 of Table 8A of Appendix A to the Immigration Rules makes clear that in order to qualify for an extension of stay after 3 years, Tier 1 Investors who applied to enter the category after 6 November 2014 must have invested at least £2 million by way of purchase of UK Government bonds, share capital or loan capital in active and trading UK registered companies.  Row 1 of Table 9A of Appendix A contains the same restriction in relation to applications for indefinite leave to remain.

  • Government bonds (or gilts) are effectively a loan to the government.  The government issues bonds in order to support its spending. Because government bonds are backed by the credit of the UK government, default is unlikely and government bonds are considered to be essentially low-risk.  Investors achieve a return through the payment of interest.
  • Share capital (or equity capital) is the money invested in a company by shareholders.  In return for their investment, shareholders gain a share of the ownership of the company.  The shareholder obtains a return on their investment through dividends (payments out of profits) and/or increases in the value of the company when it is eventually sold.
  • Loan capital (or debt capital / debt-equity capital) is a loan to a business.  The providers of loan capital do not normally share in the profits of the company. Instead, loan capital earns a fixed rate of interest instead of dividends and must be repaid within a specified period, irrespective of the company’s financial position.

Investors should note that purchase of share capital and loan capital is only permitted in respect of ‘active and trading UK registered companies’.  This means that the company must have its registered office or head office in the UK, a UK business bank account showing recent business transactions and be registered for UK corporation tax.  Multinational companies with either a registered office or head office in the UK are acceptable. The company must also be doing business. The purchase of loan or share capital in a non-trading or dormant company would not be accepted as a qualifying investment.

What forms of investment are not permitted on a Tier 1 Investor visa?

In addition to the restriction set out above, paragraph 65 of Appendix A to the Immigration Rules provides an exhaustive list of investments that will not be accepted when applying for an extension of stay or settlement as a Tier 1 Investor.

Importantly, Tier 1 Investor visa holders are not permitted to invest in companies mainly engaged in property investment, property management or property development.  As we discussed in our previous article ‘Can Investors and Entrepreneurs invest in property?’, this means that an investment in a company mainly engaged in investing in or developing property to increase the value of the property with a view to earning a return either through rent or a future sale, or both, will not qualify.  Similarly, an investment in a company mainly engaged in the management of property for the purposes of renting it out, or resale, will not qualify. However, not all property-related investments are prohibited. The basic principle is that business income must be generated from the supply of goods and/or services and not derived from the increased value of property or any income generated through property, such as rent. Therefore, this restriction does not, for example, prevent a Tier 1 Investor from investing in company that is mainly involved in construction or, indeed, a hotel.

Tier 1 Investor migrants should also be careful not to invest in an offshore company or trust or otherwise hold their investments offshore as such investments will not qualify for an extension of stay or settlement.  The UK government does not regard investments from offshore companies as investment in the UK, at least in part because they do not deliver maximum tax benefit to the UK.

Individuals holding a Tier 1 Investor visa must also ensure that they do not invest their funds in open-ended investment companies, investment trust companies, investment syndicate companies (pooled resource / shared risk entities such as ‘namecos’ operating as part of a banking, underwriting or insurance syndicate, for example) or pooled investment vehicles.

The £2 million funds relied on to secure a Tier 1 Investor visa also must not be invested by using deposits with a bank, building society or other enterprise whose normal course of business includes the acceptance of deposits.  The only exception to this is where the investment is made in bonds offered through National Savings & Investments (NS&I), which are permitted.

UK Visas & Immigration will not approve applications for further leave to remain or indefinite leave to remain as a Tier 1 Investor that rely on leveraged investment funds, including the purchase of stocks or other investments by using borrowed funds (on margin).   And, the Home Office will not accept applications that rely on money that a loan has been secured against, where another party would have a claim on the money if loan repayments were not met. This includes the scenario of a bank lending funds to a Tier 1 Investor and then taking the investments as security.


The investment options for Tier 1 Investor visa applicants may be fairly limited, but this is because the original intention was to ensure that the category would bring the maximum economic benefit to the UK.   Whilst the extent to which this original intention has been realised in practice is debatable, the position for Tier 1 Investor visa holders who have entered, or are planning to enter, the category since 6 November 2014 is clear – only a purchase of UK Government bonds, share capital or loan capital in active and trading UK registered companies will qualify for an extension of stay and settlement in the UK.

Contact our Investment Immigration Barristers

For professional advice in relation to an application for entry clearance, further leave to remain or settlement as a Tier 1 Investor, contact our immigration barristers on 0203 617 9173 or via our enquiry form.


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