By Nadine Goldfoot
Brexit has been delayed for a third time, now until Jan. 31, 2020 unless the Withdrawal Agreement can be ratified before then. Given the continued possibility of a no-deal crash out, individuals are taking steps to protect their own positions.
There are primarily two groups immediately affected by Brexit; European nationals living and working in the UK, and British citizens living and working in Europe.
For the first group, the UK government has already begun implementing a scheme to register European nationals who established residence in the UK before exit day. European nationals who do not establish residence in the UK before exit day will not have a routine expectation of settlement, but may qualify to remain in the UK, depending on their skills and other characteristics, when the UK’s new immigration system is rolled out from January 2021.
The UK government has been clear in its intention to move to a new immigration system by January 2021, and discussions of that new system are ongoing with a government white paper expected in 2020. At this stage, it would appear, a loosening of the currently restrictive rules will be in order, given that the UK is set to lose access to the European labor market, which is currently a free travel area with around 502 million people.
IMPACT FOR THOSE CONSIDERING MOVING TO THE UK
For those who already have European citizenship, or are in the process of acquiring it, the outcome is simple; they must establish residence in the UK before free movement is ended in order to benefit from the routine expectation of permanent settlement after 5 years living in the UK. When exactly free movement ends in turn depends upon Brexit negotiations. If the UK leaves the EU with a “deal” (i.e. signs the Withdrawal Agreement) then free movement will end on Dec. 31, 2020. If the UK leaves the EU without a deal, then the cutoff date will simply be the date of exit – now scheduled for Jan. 31, 2020.
European citizens who arrive in the UK after the cutoff date will in the first instance be eligible for Euro TLR, giving them an unrestricted right to live, work and study in the UK for an initial period of 3 years. However, this is only intended as a bridging measure, and crucially, there is no automatic expectation that this category will lead to permanent residence. This still leaves significant uncertainty; Europeans arriving after the end of free movement are unlikely to want to establish roots in the UK without knowing whether they will ultimately be able to stay. But where an individual can identify that they would be able to remain in the UK under the current system (for example by performing skilled work or making an investment in a UK business) relocating with Euro TLR may still make sense.
Previously, acquiring European nationality would allow the individual to freely move to the UK. Two significant EU countries offering citizenship by investment programs are Cyprus and Malta; however in either case the application process will take at least 6 months, or at this point most likely significantly longer. Therefore, if the application for European citizenship is made to allow the individual to relocate to the UK, this will only lead to a routine expectation of settlement if the cutoff date for free movement is the end of 2020, which assumes that the UK will leave the EU with a deal.
WHAT ABOUT NON-EU NATIONALS MOVING TO THE UK?
Despite the political uncertainty around Brexit, the UK remains a favorable destination for investors attracted by the weak pound and real estate professionals considering UK property as significantly undervalued at present. There is no restriction upon a foreign national owning property in the UK, however conversely, owning a UK property does not confer any immigration advantage on a foreign national. So what options are available?
For those who can afford it, a visa category of interest is a Tier 1 Investor visa, which gives the holder temporary residence status, and leads to permanent residence after 5 years. During this time the individual must make and maintain an investment with a purchase value of at least 2 million British pounds in loan or share capital in UK registered and trading companies (other than those involved in property development or management).
For those moving to the UK to run businesses, where the Investor visa is not an option, there are a number of possibilities. If the individual is coming to establish a UK branch of an overseas parent company, they may obtain a visa as the sole representative of that business in the UK. Those who can demonstrate that they are, or have the potential to become, world leading talents in the fields of digital technology, arts and culture, engineering, science, medicine and the humanities, may qualify in the Tier 1 Exceptional Talent category.
All these visa categories allow the individual to move to the UK with a temporary residence status, which leads to permanent residence after 5 years provided the individual has remained physically resident in the UK throughout the period. They also allow the individual to sponsor their family members (spouse and children under 18 years old).
But the vast majority of non-EU immigration to the UK is outside of these categories, which is for work and study. These are sponsored routes, meaning that the individual can only qualify for the visa with the support of an existing school, university or employer, and their immigration status is tied to them continuing to study or work throughout their period of residence in the UK. The work route leads potentially to permanent residence after 5 years living in the UK, but study does not unless the individual spends 10 years in the UK in total, or switches to another category. Migrants under the age of 31 of certain nationalities (including Australia, Hong Kong, Japan and South Korea) can enjoy a period of 2 years in the UK on a working holiday (known as the youth mobility scheme).
These are broad strokes, but outside of these routes there are relatively few options for relocating to the UK. That seems set to change with the rollout of the new immigration system starting from 2021. How will this change the picture?
A NEW IMMIGRATION SYSTEM IN 2021
There is an expectation that the regime for skilled workers in particular will have to change, and there is significant pressure from UK businesses to make it easier to sponsor skilled foreign workers, for example by abolishing the requirement to first advertise the position to the UK resident labor market before an offer can be made. It is possible we may instead see the government replace the labor market testing requirement with a simple minimum salary threshold, perhaps 30,000 British pounds a year.
We may also see pressure on the government to make it easier for new businesses to be established in the UK. At present, it is only possible for a foreign worker to establish a new business in the UK if they can demonstrate to a licensed UK endorsing body that they have an innovative, scalable and sustainable idea for a new business. Investment into existing businesses is not permitted, and the idea must be genuine and original, with evidence of potential for job creation into national and international markets. Moreover, there is only a very small number of tech-focused, primarily London-based incubators who are licensed to approve applicants under the program. Altogether, this program for foreign entrepreneurs, launched in March 2019, has only seen two applicants nationally in the first 3 months of operation. With the UK desperately needing foreign investment post-Brexit, this level of restriction will become difficult to justify or sustain.
Brexit is therefore continuing to create significant upheaval in the UK immigration space; the looming introduction of immigration controls upon European nationals may also be accompanied by a relaxation of the currently restrictive regime for business, skilled and investment-driven migration. This said, while UK polling suggests public support for existing or higher level of skilled migration (76% of Britons in a 2018 Yougov poll) there is at the same time a strong majority who think that overall levels of migration to the UK are, and have been, too high (63% of Britons). It is unlikely this will change in the medium term future and therefore it would be reasonable to expect the government to move cautiously in opening up access.
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