How to apply for a UK Innovator Visa
The UK launched its Innovator visa on 29 March 2019. It replaces the Tier 1 (Entrepreneur) visa, and is different in a number of significant ways. The key points are as follows:
- 3 year grant of leave, with option to apply for ILR after this if criteria are met
- Aimed at more experienced business people seeking to establish a business in the UK
- Applicants must have an innovative, viable and scalable business idea
- The idea needs endorsement by an endorsing body
- Need to show £50,000 funding available to invest in the business
The endorsing bodies
The biggest change from the previous Tier 1 (Entrepreneur) route is the need for applicants to have their business idea ‘endorsed’ by one of the endorsing bodies. The full list of endorsing bodies for the Innovator visa is here.
Given that the nominal number of endorsement places given to endorsing bodies appears to be 25, and the number of endorsers currently stands (at the time of writing, 1 April 2019) at 24, the means that only 600 endorsements can be made on an annual basis.
To give an idea of the potential squeeze on numbers this might create compared to the previous entrepreneur route, in 2018 there were 1160 grants of Tier 1 (Entrepreneur) status; 974 in 2017; 812 in 2016; and 918 in 2015.
And remember that there was a scandalously high 50% refusal rate in the previous route, so the numbers of individuals actually seeking leave to remain to run a business in the UK was far higher.
‘Same business’ vs ‘new business’
The first step for an applicant to take is to decide whether their application will be judged by the ‘same business’ criteria, or the ‘new business’ criteria.
If an applicant was previously granted leave as a Tier 1 (Graduate Entrepreneur), or leave in the Start-Up or Innovator Categories, and they are pursuing the same business idea that they previously received the endorsement for, they will be applying under the ‘same business’ criteria.
All other applications, including initial applications from outside the UK and extension applications where the business proposal has changed, will be assessed under the ‘new business’ criteria.
New business: ‘endorsement criteria’
As with the Start-Up visa, the applicants will need to present a business proposal which will be judged against the following criteria:
The UK visa authorities have given the endorsing bodies significant leeway in making the decision as to whether the criteria are met. One of the reasons the Innovator route has been introduced to replace its predecessor was due to concerns raised about the quality of the businesses previously created by overseas entrepreneurs. We have analysed this previously.
The Home Office provides some suggested questions for the endorsing bodies to ask when assessing whether applications meet the standard:
- Does the applicant have a genuine, original business plan that meets new or existing market needs and/or creates a competitive advantage?
- Is the business offering something more than merely competing with similar local traders?
- Is there a need for the business in the UK market that is not already being fulfilled?
- Is the idea bringing something new to the pre-existing UK/global business market?
- Does the applicant have, or are they actively developing, the necessary skills, knowledge, experience and market awareness to successfully run the business?
- Is there evidence of market research?
- Does the applicant have realistic, sustainable, product goals?
- Is there a long-term plan for the business?
- Is there evidence of structured planning and of potential for job creation and growth into national markets?
- Is the business likely to gain sufficient traction?
- Is it a business with a potential for growth?
- Would this business successfully scale to be a part of the national market?
The rules suggest that in the Innovator route a formal business plan will be required, as the rules on extending leave require an applicant to show ‘significant achievements, judged against the business plan assessed in their previous endorsement’. Either way, the questions above should be front and centre when preparing the business proposal.
‘New business’: funding requirements
Applicants applying under the ‘new business’ criteria must show that they have £50,000 available to invest (or have previously invested the same) in their business. There are two ways of doing this, either
- Confirm it in the endorsement letter; or
- Provide evidence of funds with the application
The rules on how to show evidence of investment funds are set out at Rule W6.5, Appendix W, Immigration Rules.
Although they have been relaxed compared to the strictures of the Tier 1 (Entrepreneur) rules, it will still be far more straightforward if funding availability could simply be confirmed by the endorsing body, where there are no prescribed rules about how such availability might be verified. This saves applicants having to provide evidence of it separately.
Note that under the Innovator visa, applicants who wish to apply as a team will need to show £50,000 each, and funding cannot be shared as it could be in the predecessor route.
‘Same business’: endorsement criteria
Where an applicant
- has already spent 3 years on the Innovator visa, and does not qualify for settlement, OR
- has previously been on the Start-Up visa, or the Tier 1 (Graduate Entrepreneur) visa where they received an endorsement, AND
- they are continuing the same business idea for which they were previously endorsed
they must apply under the ‘same business’ criteria. These are as follows:
(a) The applicant has shown significant achievements, judged against the business plan assessed in their previous endorsement.
(b) The applicant’s business is registered with Companies House and the applicant is listed as a director or member of that business.
(c) The business is active and trading.
(d) The business appears to be sustainable for at least the following 12 months, based on its assets and expected income, weighed against its current and planned expenses.
(e) The applicant has demonstrated an active key role in the day-to-day management and development of the business.
(f) The endorsing body is reasonably satisfied that the applicant will spend their entire working time in the UK on continuing to develop business ventures.
As confirmed by Home Office guidance, applicants do not need to show evidence of business funding at this stage, even if they have progressed directly to this stage from a Start-up visa and have not previously had to show evidence of funding. Presumably this also applies for those switching from Tier 1 (Graduate Entrepreneur) visas.
This means it is conceivable for a bootstrapping entrepreneur, relying only on his or her wits and a good business idea, to enter the UK via the Start-Up visa route, transfer to the Innovator visa route after 2 years, and then settle after 5 years (in total), and at no point be required to show the availability of external funding.
Innovator visa applicants will also need to meet requirements in relation to
- Maintenance – showing at least £945 (and £630 for each dependant) in their bank account for over 90 days
- English language – applicants must show that they are able to speak English to at least B2 CEFR level
Tier 1 (Entrepreneur) applicants previously had to obtain overseas criminal record checks. It is not clear whether this will be imposed on prospective Innovator visa holders.
Making the application
It is possible to switch to the Innovator visa route from within the UK from the following categories:
- Tier 1 (Graduate Entrepreneur)
- Tier 2
- Tier 4 (General) (with restrictions)
- Visitor who has been undertaking activities as a prospective entrepreneur
At the time of writing, the fee for out of country applications is £1,021 or £1,277 from within the UK. Note that these fees regularly increase. The same fee applies for each dependant family member. The immigration health surcharge will also be payable.
Decision by UK Visas and Immigration
The average refusal rate in Tier 1 (Entrepreneur) route applications was 50%, in main part due to the introduction of the ‘genuine entrepreneur’ test in 2013.
Given that it is only applicants who have been endorsed will be applying for visas, one assumes the refusal rate will be far lower in the Innovator route (the Tier 1 (Graduate Entrepreneur) route, where a similar system of endorsements previously operated, had a grant rate of 95% in its last 4 years).
Despite the fact that the immigration rules provide for a ‘credibility assessment’ after the endorsement has been given (see paragraph 3.7 of Appendix W, Immigration Rules), guidance suggests that this will not normally be necessary, and will only be used where specific intelligence is received in respect of an individual applicant.
If the application is unsuccessful for any reason, applicants can re-apply using the same endorsement, providing the 3 month period from the date of the endorsement has not yet expired.
Innovator visa holder responsibilities
If granted the visa, Innovator visa holders will be expected to spend their time exclusively working to develop their business.
UKVI expects the endorsing bodies to monitor progress of Innovator visa holders, and they will be required to report progress (at least) at the 6, 12 and 24 month stages of their visas. At these points, they will need to demonstrate that they have made reasonable progress with their original ideas.
If they are no longer pursuing their original business ideas, applicants must be pursuing new business ideas that are also innovative, viable and scalable.
Options at the end of the visa: settlement or extension
At the end of the 3 year period, applicants have two options:
Extend for a further 3 years, if they meet the ‘same business’ criteria outlined above, or
Apply for Indefinite Leave to Remain, or Settlement, if
- they meet ‘same business’ criteria set out above; AND
- meet at least two of the settlement criteria
The Settlement criteria are as follows
- At least £50,000 has been invested into the business and actively spent furthering the business plan assessed in the applicant’s previous endorsement.
- The number of the business’s customers has at least doubled within the most recent 3 years and is currently higher than the mean number of customers for other UK businesses offering comparable main products or services.
- The business has engaged in significant research and development activity and has applied for intellectual property protection in the UK.
- The business has generated a minimum annual gross revenue of £1 million in the last full year covered by its accounts.
- The business is generating a minimum annual gross revenue of £500,000 in the last full year covered by its accounts, with at least £100,000 from exporting overseas.
- The business has created the equivalent of at least 10 full-time jobs for resident workers.
- The business has created the equivalent of at least 5 full-time jobs for resident workers, which have an average salary of at least £25,000 a year (gross pay, excluding any expenses).
We will be looking at this in more detail in future posts, but it is ironic that as UKVI formally moves away from a Points Based System which it never really embraced, it has created a route to settlement via the Innovator visa route which allows applicants to meet criteria by a variety of means (which is of course the foundational principle of a Points Based System).