How do International Tech Companies Establish a Business in the UK?
According to research by Dealroom and Tech Nation, the United Kingdom is officially the “tech unicorn capital of Europe”. A tech unicorn is a private company valued at more than £745 million and the UK is home to 37% of Europe’s total unicorn companies.
Wendy Tan White, Board Trustee of the Alan Turing Institute and board member at Tech Nation, said: “As an entrepreneur and an investor I see that momentum in the UK technology sector is building relentlessly, helped by a world-class research and academic environment.”
It therefore comes as no surprise that the UK offers a variety of options to encourage fledgling and established tech companies to set up a UK presence. Due to the niche skills required by tech businesses, companies usually build their workforce using a combination of existing overseas employees and new recruits. In either case, employees who are not EEA citizens will require a visa to allow them to come to the UK.
Below is a summary of the main immigration routes available to non-UK tech companies seeking to establish a business presence in the UK. We also explain how tech companies can sponsor non-EEA nationals to work in the UK, once the business is up and running. With new categories of visa open to fledgling tech businesses, there has never been a better time for tech companies to set up or grow in the UK.
Representative of an Overseas Business
An overseas tech company seeking to establish a branch or place of business in the UK may be able to send an employee to the UK under the “Representatives of Overseas Businesses” category. Both the tech company and the employee must meet certain criteria to be eligible for this category. For example, the employee must be employed full-time, senior and the overseas business must have its principal place of business and headquarters outside the UK with no existing UK presence.
There are two other possible routes for establishing a business presence in the UK for non-EEA nationals. Through these two immigration categories, individuals can establish one or more businesses and employ both EU nationals as well as non-EEA nationals through sponsorship. The Home Office closed the Tier 1 (Entrepreneur) category on 29 March 2019 and introduced the new Tier 1 Innovator and Start-up categories instead.
Both categories of visa require the applicant to be endorsed by an organisation which is on the list of “endorsement bodies”, compiled by the UK Government. The endorsing body will assess the applicant against specified criteria to decide whether the application should be supported.
The Start-Up Visa
The Start-Up category is for early-stage but high potential entrepreneurs who are starting a business in the UK for the first time.
Applicants do not need any funds to invest in their business at this stage, offering a great opportunity for tech companies who have not secured funding. It offers a one-off, two year visa, during which applicants will spend the majority of their time developing their business. However, they can also take on other work outside of their business, to support themselves whilst they grow their business.
Successful applicants can bring their family members to the UK, including spouses/partners and children under 18. At the end of two years, they can switch into the Innovator category to extend their stay and further develop their business in the UK.
The Innovator Visa
The Innovator category is for more experienced businesspeople seeking to establish a business in the UK. Applicants will usually need a minimum of £50,000 funding available to invest in their business. This does not have to come from their endorsing body, although some endorsing bodies may choose to offer this funding. Innovators must work entirely on developing their business ventures and may not take on other employment outside their business. This includes anything which effectively amounts to employment, such as using their own business to hire out their labour to another employer.
The funding requirement will be waived for those switching from the new Start-Up scheme and who have made significant achievements against their business plans.
Successful Innovators are granted permission to stay in the UK for three years at a time and can bring their family members to the UK. After three years, Innovators can apply to extend their stay for a further three years or to settle permanently in the UK. Innovators require continued endorsement from an endorsing body at the extension and settlement stages.
Once a tech business is established in the UK, it can apply to the Home Office for a sponsor licence to sponsor non-EEA national employees. A sponsor licence enables the employer, the UK business, to assign certificates of sponsorship to prospective UK employees. The prospective UK employees need the certificates of sponsorship to support their visa applications.
Employers can sponsor new hires or transfer existing employees based in other countries to the UK. In most cases, the work will have to be at a skill level of UK Regulated Qualifications Framework level 6 or above and be at the required salary level set by the Home Office for the specific role. There are various concessions available to individuals who can offer a certain skill set to the tech sector, but a sponsor will usually have to advertise the vacancy before sponsoring a new hire on a salary less than £159,600.