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Introduction of new Start-up and Innovator categories
7.1 These changes introduce two new categories, Start-up and Innovator, for people seeking to establish a business in the UK.
7.2 These new categories replace the existing Tier 1 (Graduate Entrepreneur) and Tier 1 (Entrepreneur) categories, which were the subject of a review by the independent Migration Advisory Committee (MAC) in 2015. The MAC recommended that:
• the Tier 1 (Graduate Entrepreneur) category, with its endorsement approach, was working well and should be expanded into a broader Start-up category;
• the Tier 1 (Entrepreneur) category was in need of substantial reform, as it had a long tail of low quality projects which contributed little or nothing to the UK economy.
7.3 Central to both of the new categories will be endorsement of applicants by UK trusted bodies – such as business accelerators, seed competitions and government agencies, as well as higher education providers. These bodies will assess applicants’ business ideas for their innovation, viability and scalability.
7.4 The main features of the new categories are as follows:
• The Start-up category is an expanded version of the Tier 1 (Graduate Entrepreneur) category. It is for those starting a new business for the first time in the UK. Applicants will not need to be graduates and will not need to have secured any initial funding. Successful applicants will be granted 2 years’ leave (doubled from 1 year) and will be able to progress into the Innovator category to continue developing their businesses in the UK after that time.
• The Innovator category is intended for more experienced businesspeople. As well as an endorsement, applicants will need £50,000 to invest in their business from any legitimate source (reduced from £200,000 for most applicants in the current Tier 1 (Entrepreneur) category). The funding requirement will be waived for those switching from the Start-up category who have made significant achievements against their business plans. The category may lead to settlement in the UK.
Changes are being made to provide greater assurance that Tier 1 (Entrepreneur) migrants are genuinely engaged in business. Applicants will be asked to provide an overview of their business’s activity, details of their role within the business, and the job titles/descriptions for the settled worker employees for whom they are claiming points. The government has judged it proportionate to apply these changes to future extension and settlement applications by entrepreneurs already in the category.
The grant periods for Tier 1 (Entrepreneur) entry clearance applications do not take account of the possibility of making extension applications overseas. The current rules grant entry clearance for 3 years, 4 months for both initial and extension applications, whereas leave to remain is granted for 3 years for initial applications and 2 years for extension applications. The entry clearance grant period for extension applications is being changed to 2 years, 4 months, for consistency with leave to remain grants and the transitional arrangements above.
The rules state that a transitional arrangement, relating to job creation, for applicants who entered the category under the rules in place before 6 April 2014, will close on 6 April 2019. This transitional arrangement is being removed from the rules in line with this closure.
A transitional arrangement, relating to investments through directors’ loans, for applicants who entered the category under the rules in place before 19 November 2015, will shortly no longer be needed as these applicants will have had sufficient time to qualify for settlement. A change is being made to give notice and close this transitional arrangement from 19 November 2021.