Recently published Home Office figures reveal that the number of people applying for a UK Tier 1 investor visa has plummeted. For the second quarter of 2015, the number of applications has dropped by approximately 82% compared with the same period last year. This is most likely because of the increase in the investment requirement for the Tier 1 investor visa from £1 million to £2 million in November 2014 and steps taken by the UK to increase taxes which has put off potential Tier 1 investors.
2014 also saw a surge in Tier 1 investor visa applications from Chinese nationals. 357 investor visas were issued to Chinese nationals for the year ending 30 September 2014. This compares with the 178 such visas issued in the previous 12 months;
Between April and June, 2015, only 44 applications in total had been submitted for tier 1 investor visas. Rewind back to the same period in 2014, 251 people had lodged an application. First quarter figures were also low. Between January and March, 2015, just 58 applications had been received.
International professional development association, STEP, said: "The decline is probably an after-effect of the spike of applications received towards the end of last year . Many investors rushed to submit their applications prior to the increase of the minimum investment, which increased from £1m to £2m ($3m, €2.7m) back in November 2014."
STEP added that the number of tier 1 investor visa applications currently received in 2015 is 'by far the lowest since 2010.' They went on to say that it could be the 'first sign that the progressive limitation of non-dom [a UK resident whose permanent home/domicile is based outside of the UK] tax advantages is dissuading people from inward investment.'
Government has misjudged international competition for investor immigrants
Mark Davies & Associates, a tax consultancy firm, said: "The steep decline could be attributed to an increase in competition between the UK and other EU nations offering visa programmes that also lead to an EU passport."
Using Cyprus as an example, the firm described how an investor applicant can obtain a full EU passport within three months. In the UK, an investor visa requires a five-year commitment from an applicant. Additionally, other European countries like Portugal request a much lower minimum investment.
The firm's managing director, Mark Davies, said: "In my opinion, the UK government has misjudged the competition that the UK's tier 1 investor visa programme faces. It's my belief that for an investor programme to be successful, it must be synchronised with tax policy."
Restricting benefits for wealthy non-domiciles
Mr Davies added: "In the build-up to the General Election in May, the taxation of 'non-doms' was a topical issue, which culminated in George Osborne's summer budget. The budget proposed a radical change to the rules that would restrict the benefits for non-doms to 15 years."
A number of commentators have said that it's a pity that 'just as other authorities are mirroring the UK's remittance basis for foreigners, the UK has decided to restrict its tax system which had previously stimulated foreign investment.'