Is the UK Really Open for Business? Starting a Business in Post-Brexit Britain

It is fair to say that the UK operates one of the more complex immigration systems worldwide. This is particularly so post-Brexit, which marked the end of free movement rights between the UK and the European Economic Area (EEA).

For those starting a business in the UK, the issue of immigration is one that they will undoubtedly encounter at an early stage in their journey – whether in terms of their own visa status or that of staff members.

Government after government has widely accepted that attracting foreign entrepreneurs to the UK is beneficial to the economy and necessary to keep the UK market competitive. However, since the closure of the Tier 1 (Entrepreneur) route to new applicants in 2019, the number of foreign entrepreneurs relocating their projects to the UK has noticeably dwindled.

The Innovator visa was brought in as an effective replacement for the Entrepreneur visa category but, unfortunately, the new route is notably more restrictive than its predecessor. This has led to wide-ranging commentary on how it is not particularly fit for purpose.

Rather than simply having to convince the Home Office of the viability of one’s business plan, as was the case under the former Entrepreneur route, an applicant now has to go through the rigmarole of two subjective assessments. First, they must apply to a Home Office-approved “endorsing body” for sign-off of their plan – only thereafter can they apply to the Home Office for their visa, subject to receiving a positive endorsement.

With the involvement of an endorsing body, the Innovator route has introduced an element of “sponsorship”. On the one hand, this might improve the quality of projects coming into the UK. On the other, however, it might have put off many genuine entrepreneurs from relocating to the country, owing to an additional layer of bureaucracy and the inability to simply “self-start” a project in the UK.

The Innovator route has since been rebranded to “Innovator Founder” (in April 2023) and, with this, the number of approved endorsing bodies was slashed from around 60 to just three (as of July 2023).

For certain entrepreneurs, the Global Talent visa might be a feasible alternative to the Innovator Founder route, being designed for those operating at the highest calibre in the fields of science, engineering, humanities, social science, medicine, digital technology or arts and culture. The Global Talent path, however, adopts the same endorsement and two-stage application approach as the Innovator Founder route. Also, owing to the very high threshold necessary to qualify for endorsement, it often yields uncertain results.

Moreover, there is an obvious gap when it comes to qualifying for Global Talent endorsement as a tech entrepreneur. TechNation, the current authorised endorser in this space, will only recommend technical or business applicants who have a proven track record at “digital product” businesses. Accomplished tech leaders, such as Chief Information Officers and Chief Technology Officers at large-scale service companies, would therefore fall short of qualifying for endorsement. Perhaps this is something that will be addressed by the new endorsing body expected to replace TechNation imminently.

For any new business project to have hopes of survival, the recruitment of talent is also something that must be carefully considered. Since the UK’s departure from the EU, however, the pool of available workers is not what it used to be.

The basic post-Brexit position is that EEA and Swiss nationals who were not living in the UK by 31 December 2020 no longer have an automatic right to work here, as they would have done when free movement rights applied. Such individuals are effectively now considered the same as non-European nationals in the eyes of the UK’s immigration system and so, to come to the UK for work purposes, they must apply for and obtain an applicable type of visa.

The majority of non-resident workers in the UK will be here pursuant to Skilled Worker visas, the new name for the historic Tier 2 category. It is for this reason that more and more small businesses are having to consider obtaining sponsor licences from the Home Office – something that is a prerequisite for being able to sponsor any prospective hires under the Skilled Worker route.

However, obtaining a sponsor licence and subsequently sponsoring any staff comes with costs and HR compliance obligations – yet another facet that makes starting and running a new business in the UK more difficult. Presently, for a small business to sponsor a non-resident worker for a period of just one year, you would be looking at official fee payments to the Home Office of at least GBP1,099 (which cannot be passed on to the potential employee).

Potentially lower-cost alternatives to the Skilled Worker route might include Graduate, Youth Mobility Scheme, High Potential Individual or Ancestry visas. However, these visas have narrower eligibility criteria and will be highly dependent on the individual circumstances of any new hire.

Navigating the UK immigration system can be daunting and may thwart a number of promising entrepreneurial projects from even getting off the ground. Nevertheless, with forward planning and sound advice, it is certainly possible for the immigration matters of a new business to be correctly administered and well-managed – so that business leaders can focus on developing their projects in what is a competitive but potentially very rewarding environment.