Covid-19 has had a huge impact on economies worldwide and global markets have taken a dramatic hit, which has led to a significant drop in the value of many Tier 1 (Investor) portfolios.
We have been receiving a lot of queries from concerned clients and their bankers/wealth managers about whether this drop in value means that the Tier 1 (Investor) is now in breach of the terms of their immigration status.
By way of reminder, those who are in the UK under the Tier 1 (Investor) category are required to invest at least £2m in UK government bonds (for initial applications submitted before 29 March 2019) and/or share capital or loan capital (such as corporate bonds) in active and trading UK companies (Qualifying Investments). The following rules apply to maintaining the investment portfolio:
- if the Tier 1 (Investor) migrant made an initial Qualifying Investment of at least £2m, they do not need to top up their Qualifying Investment if the value of the portfolio drops below £2m, provided no capital has been removed and all appropriate income generated by the portfolio has been re-invested;
- if a Qualifying Investment is sold, the full proceeds of sale must be re-invested in a new Qualifying Investment, whether the previous investment was sold at a loss or a gain. They must also re-invest any interest accrued or dividends declared at the time of purchasing the Qualifying Investment by the end of the next reporting period, or within six months, whichever is sooner; and
- for those who applied under the Tier 1 (Investor) route before November 2014 and are therefore only required to invest a minimum of £1m, they are required to top up their investment if it drops below £1m. This must be done before the end of the reporting period following the reporting period where the drop in value occurred.
For those Tier 1 (Investor) migrants under the £2m route, they (and their advisers!) therefore do not need to be concerned, at least from an immigration perspective, if the value of the portfolio drops below £2m, provided an initial investment of £2m was made and the portfolio has subsequently been maintained in line with the Tier 1 (Investor) requirements.
The loss in global economic output caused by the coronavirus pandemic will “dwarf” that of the 2008 financial crisis, the IMF warned today, forecasting the worst contraction since the Great Depression of the 1930s.