UK: An Introduction to Immigration: High Net Worth Individuals
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UK: An introduction
On a global basis, the pandemic has resulted in more High Net Worth (HNW) individuals, with recent figures confirming that those with assets of more than USD30 million rose by a record 9.3% in 2021.
The UK contributes to this trend, with rising house prices and investment markets helping to fuel this increase. In terms of immigration, there are several global headwinds that are already impacting the UK HNW cohort, or have the potential to do so in the future, including:
• ongoing COVID-19 travel restrictions and related travel and health concerns;
• the crisis in Ukraine; and
• the implications of Brexit.
Global uncertainty will continue to affect the key driving factors behind international relocations, so now more than ever it is vital that HNW individuals obtain timely strategic advice. We discuss the impact of these factors on HNW individuals, and the key changes to the sector in the last year.
The impact of COVID-19 and geopolitical factors
As we enter this living with COVID-19 period, the migration environment remains complicated with HNW individuals facing many considerations in determining whether and where they will travel to or relocate. The pandemic, and to a lesser extent Brexit, have forced HNW individuals to reconsider their priorities, with health care infrastructure, national security, and political stability featuring higher in the list of key considerations. Sadly, the conflict in Ukraine is also likely to have an ongoing impact on the decisions made by governments.
These factors have also caused HNW families to reassess their long-term motives for relocation. Increasingly, families are considering how they can bequeath future benefits to their children, such as freedom of movement within the EU, or an alternative citizenship (which might provide greater flexibility for travel, study and residence rights). Jurisdictions that permit dual citizenship have also become increasingly attractive.
The rise of digital nomads
As companies formalise the hybrid working policies which grew rapidly during the COVID-19 pandemic, governments have been trying to keep pace with this new type of workforce by introducing digital nomad programmes. These programmes now appear in at least 28 countries, with more on the horizon, and allow foreign nationals to perform work for an employer outside of the country where they are living as a digital nomad.
HNW individuals, and in particular those without school-age children, are now considering these programmes as a way to achieve the flexibility they require in their work and personal lives. For governments affected economically by the pandemic, digital nomad visas are a new and flexible way to drive investment in their country and compete with other jurisdictions to secure the brightest talent from an increasingly mobile global workforce. With the global decline of residence programmes based on purely passive investments, we expect to see digital nomad visas become a partial solution to the need for governments to drive active investment in their economies.
Data privacy – a new COVID-19 era concern
Another new and major global concern is the privacy of health information.
Since the start of the pandemic, governments have moved more immigration processes to the digital space. Travellers are now asked to share personal medical data with governments, international organisations and even third-party companies before and after arrival, often on a digital platform. 82 out of 166 countries surveyed by Fragomen had a digital health platform for COVID-19-related information as of 1 March 2022.
With different stakeholders increasing their collection of health data, and with governments becoming more reliant on a growing number of online platforms to monitor compliance, stricter data privacy laws will become paramount. However, a centralised global data protection law or system is highly unlikely. We therefore expect technologically advanced countries with strong data protection infrastructure and rules to be increasingly attractive to privacy and data conscious HNW individuals planning international relocations.
Citizenship and residence by investment programmes
Residence and citizenship by investment programmes grew rapidly after the financial crisis in 2008 in an effort to revitalise struggling economies. The impact of the pandemic on the global economy, coupled with the repercussions of UK citizens losing free movement rights in the EU, has resulted in many HNW individuals from the UK and other jurisdictions considering the benefits of such programmes over the last year.
There are benefits to the acquisition of an alternative residence or citizenship, including the possibility of easier global travel, the ability to do business in multiple jurisdictions, and potential work, study and residence benefits for family members. Despite the appeal of these programmes, HNW individuals should carefully consider the related risks. For example, Moldova and Cyprus cancelled their programmes due to corruption scandals, and the European Parliament continues to push for unified and stricter regulation of “golden visa” routes, particularly focused on adding stricter background checks, reporting obligations and minimum residence requirements.
With the crisis in Ukraine and the resulting closure of various investment-related routes for Russian nationals in several European countries, it has become evident that such programmes are more exposed to swift political action during emergency situations than other immigration routes. Across Europe and worldwide, we are likely to see an increasing requirement for active investment from applicants, or a drive to funnel investment into more socially conscious, Environmental Social and Governance driven areas, in order to obtain residence or citizenship.
Closure of Tier 1 (Investor) route in the United Kingdom
On 17 February 2022 the UK’s Tier 1 (Investor) route was closed without warning to new applications with immediate effect, with the UK Government citing “security concerns”. The route had provided an initial right of residence and, subject to strict residence requirements, a route to permanent residence for individuals able to make a significant passive investment in the UK. Applicants already within the category will have the chance to extend their visas or apply for permanent residence.
This leaves the UK without an immigration category for individuals seeking to relocate based on passive investment for the time being, though there may be other suitable categories for HNW individuals to explore. The UK Government has promised to make significant reforms to the existing Innovator visa category by Autumn 2022 to provide targeted provision for investment-related migration. This route will require an applicant to have a track record of overseas investment activity and credible plans to do the same in the UK. In addition, the Home Office has recently announced an expanded Global Mobility route, together with a “scale up” visa for potential high-growth businesses and a short-term route for “high potential” individuals. So far none of these routes provide a direct replacement for the closed Tier 1 (Investor) route.
There is an important need for overseas investment in the UK economy, and history has shown us that many of the UK’s most successful companies have been driven by exactly that. There is now an opportunity for the UK Government to consider changes to investment-related migration which encourage socially and environmentally responsible investments which will benefit the UK economy and labour market, backed by strict compliance criteria and safeguards against abuse.
Brexit impacts on HNW individuals in the UK and EU
Brexit continues to heavily impact the decisions made by HNW individuals. With free movement a thing of the past for the UK, we are now seeing British Citizens seeking alternative ways to regain this flexibility by securing a right of residence, or even citizenship, in an EU country – typically through a financial investment or property purchase. In this context, the concept of “succession planning” is a growing consideration for HNW UK families who are seeking ways to afford their children the opportunity to easily travel and study in the EU.
We have not yet seen significant numbers of HNW EU nationals seeking to relocate to the UK post-Brexit, although an attractive investment-based immigration route is likely to increase interest. Notwithstanding Brexit, the UK continues to be an attractive location for individuals relocating from other locations worldwide, with the expanded Global Talent route providing an excellent and popular option for tech entrepreneurs and investors from tech hubs around the world.
At Fragomen, we advise High Net Worth clients on all aspects of immigration strategy and transactional work, covering almost every jurisdiction worldwide.
For further information please contact:
Nadine Goldfoot, UK Managing Partner, Fragomen at [email protected]