Tuesday, 21 November 2017

10 weeks of Tier 1 Entrepreneur visa tips – Week 7 – How to invest GBP 200,000 and what to spend it on?

Once you have your Tier 1 Entrepreneur visa, it is actually just the beginning - now the real work begins. You have 3 years to invest the capital of GBP 200000.

The main thing here is to understand the difference between the following:

On one hand, there are practical day-to-day actions, such as transferring the money from your personal account (or your sponsor’s account) to your UK company’s account you are investing in. So, you transfer the funds to your UK company’s bank account, then you can use it to run your business, ie to spend on your business expenses.

What can you buy with this money? Generally, this is dictated by the tax rules, some expenses are allowable, some not. In short, you can spend it on the costs of running your business, ie things you need to buy to have your business going: stock / supplies, wages, rent of premises, marketing, business-related travel, website etc.

The visa rules go further: you cannot spend this money on buying a residential property in the UK or to pay yourself. You can still buy a property and you can pay yourself but not from £200,000 (you need extra funds for that).

We are often asked, can I buy a car or an office for my business? Yes, you can, if your business requires it.  Although there are tax rules on how you can offset thse costs against your company’s tax liability but the visa rules don’t prevent you from buying such things.

On the other hand, we have accounting rules on the investment. From the accountants’ point of view, the money doesn’t appear from nowhere – it either flows in the company as share capital or as a director’s loan. Director’s loan  a loan from you to your company because officially, your company is a separate entity from you. Either is acceptable for the visa purpose, but director’s loan tends to be more common and more straightforward.

To read more from the government:  https://www.gov.uk/tier-1-entrepreneur/extend-your-visa


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