Starting a business - a guide for foreign nationals

The number of foreign nationals wishing to start businesses in the UK has grown steadily in recent years. While it is arguably easier to achieve this today than at any time previously, there are still significant hurdles that must be overcome. The government has recently introduced new restrictions on the movement of labour, and budding entrepreneurs will inevitably feel the effects of this. The new points-based immigration system introduced by the government in 2008-09 has further complicated the situation.

European citizens

In the first instance, it is important to remember that separate rules apply to residents of European Economic Area (EEA) member countries. If you are an EEA or Swiss national and you want to start a business in the UK, you do not need to apply for permission. The right of EEA nationals to live and work in other EEA member states is enshrined in the agreements to which all of the members have signed up.

The only exception to this involves nationals of countries that acceded to the European Union in 2004 - Bulgaria and Romania. If you are a Bulgarian or Romanian national, you may have to apply for permission unless you qualify for an exemption. Advice on exemptions, as well as guidance for applications, can be found on the UK Border Agency website.

Entrepreneur status

The good news is that prospective entrepreneurs receive favourable treatment from the immigration authorities. The new points-based system is divided into ‘tiers’, with Tier 1 dedicated to “highly skilled workers, investors and entrepreneurs”. The UK Border Agency understands this to mean those who are “setting up or taking over, and being actively involved in the running of one or more businesses in the United Kingdom.”

The eligibility criteria for entrepreneur status are fairly strict. According to the current regime, you must score at least 75 points for your ‘attributes’ in order to qualify. These points reflect your ability to access what the Home Office deems to be sufficient funds. Essentially, you must have access to at least £200,000 in a regulated bank account in the UK, and the money must be disposable in this country. Furthermore, you must have access to at least £800 at the time at which you apply.

In addition, you will be required to fulfil the criteria that apply to general Tier 1 applications. This means you will need to demonstrate that you are either from a majority English-speaking country, or that you have successfully taken a recognised and accredited English language qualification.

Extensions to visas

If you are applying for an extension to an existing Tier 1 Entrepreneur permit, you will be required to fulfil further criteria. You must have invested at least £200,000 in a UK business, excluding any commercial property or director’s loan. You must be involved in the running of the business at the time of your application for extension, and you must have registered either as a director of a company with Companies House, or as a self employed individual with HM Revenue and Customs, within three months.

As may be expected, there are wide-ranging regulations on the behaviour of foreign nationals who wish to start a business in the UK. The fundamental point to remember is that you will need permission to work in the UK in order to start a business here, in exactly the same way that you would require a permit to be a builder or work in an office. However, the restrictions in place make it very difficult for entrepreneurs to set up shoe-string companies upon arriving in Britain.

It is important to remember that immigration laws are strictly enforced, and it is vital that you comply with them otherwise you may find yourself in trouble. As such, you may wish to take specialist, independent legal advice in advance of any action.