Global Client Alerts

United Kingdom

UKBA Releases Final Rules for Permanent Cap System
March 17, 2011

When the UK’s permanent annual cap on the admission of foreign workers takes effect on April 6, 2011, there will be significant changes to Tier 2 of the Points-Based System, including heightened eligibility criteria for Tier 2 sponsored skilled workers, changes to the system for issuing Certificates of Sponsorship to employers, and new Tier 2 intracompany transferee subcategories. The Tier 1 (General) category will be restructured, with new and revised programs for investors, entrepreneurs and persons of exceptional talent. There will also be a new visit visa category for prospective entrepreneurs.

I. Changes to Tier 2

Once the new system takes effect on April 6, Tier 2 applications will be subject to new eligibility criteria and new forms of Certificates for Sponsorship will be introduced. There will also be two new Tier 2 intracompany transferee subcategories, for short-term and long-term stays. 

  • New Eligibility Criteria for Tier 2

All Tier 2 applicants will be subject to new eligibility criteria and a restructured points assessment. Tier 2 applications will no longer receive points based on the applicant’s educational qualifications. Points will be awarded based on the applicant’s sponsorship status, prospective UK salary, English language skills, and maintenance amounts only.

As previously reported, all Tier 2 occupations must be at a graduate level. Tier 2 workers must generally be paid a minimum gross annual salary package of at least £24,000 (subject to the minimum salary for the position), which rises to £40,000 for Tier 2 intracompany transferees staying more than twelve months. Tier 2 shortage occupations will not be subject to the minimum salary requirement.

The new eligibility criteria will be applied to Tier 2 applications filed overseas on or after April 6, 2011, regardless of when the Certificate of Sponsorship was issued to the foreign national. Applications submitted overseas on or before April 5 will be adjudicated under the current criteria.

  • Two Forms of Tier 2 Certificates of Sponsorship

Under the permanent cap system, the UKBA will introduce two types of Tier 2 Certificates of Sponsorship: (1) unrestricted certificates, used to sponsor foreign workers in categories exempt from the annual cap; and (2) restricted certificates, used to sponsor foreign workers in categories subject to the cap.

Employers can file applications for Tier 2 restricted certificates starting March 16, 2011. On the eleventh day of each month, the UKBA will review all applications that were submitted prior to the fifth day of the month and assess them against a new points scale. Applications that were submitted outside of published timelines may be accepted in exceptional circumstances, the UKBA confirmed. Sponsors will be notified of the outcome of the points analysis within five working days.

Employers should be aware that restricted Certificates of Sponsorship are valid for three months. They must be issued to foreign workers within that time, which means that employers will have to apply for restricted certificates within three months of a foreign worker’s proposed start date.

The process by which employers will issue unrestricted Certificates of Sponsorship will largely be the same as the current process. Please refer to our prior Client Alert for more information on applying for unrestricted certificates.

  • New Tier 2 Intracompany Transferee (ICT) Subcategories

The Tier 2 (ICT) Established Staff subcategory will be replaced with two new subcategories for short-term and long-term assignments. Intracompany transferees will be subject to a new five-year maximum stay.

Intracompany transferees under the new Tier 2 (ICT) Long-Term Staff subcategory will be able to work for up to three years initially, with a possible two-year extension available, for a maximum stay of five years. They must receive an annual salary that exceeds £40,000 and meets the minimum threshold for the job type.

Intracompany transferees under the new Tier 2 (ICT) Short-Term Staff subcategory will be able to work in the UK for no longer than twelve months, and extensions will not be available. They must receive a minimum salary of £24,000. 

A Tier 2 intracompany transferee who has reached the maximum period of stay must leave the UK and will not be able to re-enter for work for twelve months. Foreign nationals may be exempt from this rule if their original stay was less than twelve months and they seek to re-enter the UK to work for a salary over £40,000. In addition, Tier 2 intracompany transferees who applied before April 6, 2011 will continue to be able to apply for extensions of stay beyond five years.

The new rules on duration of stay do not apply to the intracompany transferee subcategories for Graduate Trainees and Skills Transfer, and there are no changes for these subcategories, other than an increase in the minimum salary requirement to £24,000.

Foreign nationals who are already in the UK in Tier 2 (ICT) status and want to extend their stays must apply under the Long-Term Staff subcategory. However, these individuals will not have to meet the £40,000 minimum salary level or work at a graduate level (though they must continue to work at or above S/NVQ Level 3); likewise, they will not be limited to a maximum stay of five years.

Tier 2 intracompany transferees ceased being eligible to apply for indefinite leave to remain, the UK’s form of permanent residence, as of April 6, 2010. However, a Tier 2 intracompany transferee granted a visa on or before April 5, 2010 will continue to be able to apply for permanent residency.

II. Restructured Tier 1 Category

Under the upcoming system, the Tier 1 (General) category as it currently operates will be closed and replaced with a restructured Tier 1 program that will have three distinct routes to incentivize foreign nationals with high net worth to come the UK. 

  • The Tier 1 (Investor) Category

The Tier 1 (Investor) route – for persons of high net worth making a substantial financial investment in the UK – will remain largely unchanged but will offer an accelerated path to settlement depending on the foreign national’s level of investment. If the investment is £10 million or more, the foreign national may apply for permanent residency after the investment is in place for two years. If the investment is from £5 million up to £10 million, the foreign national may apply for permanent residency after the investment is in place for three years. Investments of £1 million or more will still qualify for Tier 1 (Investor) status, but the qualifying period for permanent residency will remain five years.

The UK will also increase the number of days a Tier 1 (Investor) can be outside of the country without jeopardizing his or her status to 180 days in any twelve month period, from 90 days. 

  • The Tier 1 (Entrepreneur) Category

The Tier 1 (Entrepreneur) route will be used for promising start-up companies that do not meet the usual investment threshold for Tier 1 (Investors). The investment threshold for this category will be £200,000, but a £50,000 threshold will apply if the funds are provided by a registered venture capital firm, a UK government department, or a UK seed-funding competition endorsed on the UK Trade & Investment website. In addition, there will now be the option for up to two business partners to use this route if they have equal level of control over the funds invested.

Under the new system, entrepreneurs may apply for UK permanent residency after three years if they have established a new business that has created at least ten new full time jobs for persons settled in the UK or if business revenue during the three-year period was at least £5 million. If these requirements are not met, the qualifying period for permanent residency will remain five years.

As with Tier 1 investors, the number of days a Tier 1 entrepreneur can be outside of the country without jeopardizing his or her status to 180 days in any twelve month period, from 90 days. 

  • A New Visit Visa Category for Prospective Entrepreneurs

In a development related to the restructuring of Tier 1, the UKBA will create a new category of visit visa for prospective entrepreneurs. Foreign nationals using the new visa type will be allowed to enter the UK so that they can secure funding and make arrangements for starting their business before they transfer to a full Tier 1 (Entrepreneur) visa. More information on the new visa type is expected in the near future. 

  • Tier 1 (Exceptional Talent) Category 

A new Tier 1 route for persons of exceptional talent will be open to foreign nationals who are internationally recognized as world leaders or potential world-leading talent in the fields of science and the arts. This category will be capped at 1000 visas annually, with 700 allocated to science fields and 300 allocated to the arts. Applications from foreign nationals with exceptional promise must be endorsed by a competent body in their field. More details of which entities will qualify as the designated competent bodies that can endorse applications under this category are expected in the near future. 

  • Tier 1 (General) Transitional Arrangements: Individuals in the UK Seeking Extensions

Though the Tier 1 (General) category as it currently operates is closed to new applications from outside of the UK, and will generally close to applications from within the UK on April 6, it will remain open for individuals currently in the UK under the Highly Skilled Migrant Programme; Writer, Composer or Artist categories; the self-employed lawyer program; or Tier 1 (General) who wish to extend their existing permission to remain in the UK. These applicants will be required to meet the requirements that were in place at the date of their most recent application.

This alert is for informational purposes only. If you have any questions, please do not hesitate to contact the global immigration professional with whom you work at Fragomen or send an email to