Visa scheme for wealthy should fund start-ups

Wealth managers and lawyers say most high net worth individuals prefer to invest in gilts because if the value of their shareholding in a company drops below the £1m, £5m or £10m required, they are forced to top up the value of their investment.

Sir David said alternative investments, such as venture capital or angel schemes, which back start-up and fast-growing companies, would make the topping up rule redundant.

Investments in start-up companies are more difficult to value, but encouraging wealthy individuals to pursue that route would potentially be of much greater value to the UK economy than putting their money into gilts, Sir David said. “We think those [alternative investments] would be much more beneficial to UK plc and there is considerable advantage attached to that, which lots of the stakeholders … wanted, which is to get rid of the topping up rule”.

Almost 1,600 investor visas were granted to high net worth individuals and their dependants in the 12 months to the end of September. The scheme is particularly popular among Russian and Chinese millionaires. The MAC has delivered a report to the Home Office, proposing several changes, which Home Secretary Theresa May is considering.

James Sproule, director of policy at the Institute of Directors (IoD), said: “We want people from all over the world to come to invest in the UK, but the Government shouldn’t be using these visas to boost the gilt market, there’s plenty of appetite for British government debt anyway. The IoD would support a change in the visa so all of the investment goes toward boosting British business.”

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