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.