UK Visa Changes Could Damage UK Startup Culture

After the June referendum, you’d be forgiven for thinking that businesses were worried about the uncertainty of a future outside of Europe. However, there’s a far bigger change on the horizon that threatens the future of the UK’s tech startup industry. New rules, set in place by Theresa May, state that non-EU workers must be earning over £35,000 a year in order to stay in the UK on a Tier 2 visa.

Prior to these rules, non-EU nationals who came to the UK on a employer-sponsored Tier 2 visa would be allowed to settle in the UK after five years by applying for Indefinite Leave to Remain. Workers affected by these changes to legislation will either have to meet the earnings threshold, or leave the country for 12 months and then reapply. Indefinite Leave to Remain is a path to settlement which is available after a certain number of years in the UK. It allows the individual to remain in the UK indefinitely, without needing to apply for any more visas.

Despite a petition which gathered over 100,000 signatures, the changes have gone ahead as planned. There are exceptions to these rules, such as those workers in a Shortage Occupation, including nurses and engineers. Those working in PhD level research are also exempt, but this has done little to limit concerns about a future skills shortage.

How does this affect startups?

It’s about to get a lot more difficult and expensive to hire overseas talent. Hiring an overseas worker is already an expensive task, and many startups will struggle to meet the earnings threshold. Startups can either find an overseas worker who is happy to relocate with no hope of settling, or hire from the local talent pool and provide training.

Since the changes were first announced in 2011, traditional businesses have had plenty of time to prepare and put a plan in place to hire and train local workers to fill the skills gap. However, this lead time has had little benefit to startups, as many of them didn’t exist five years ago. This is another reason these changes will unfairly impact startups over established companies.

What options are available for startups?

Startups have the choice to continue as normal and hire workers from outside of the EU on the understanding that the contract will only last for five years. Alternatively, established and new startups also have the unique opportunity to move their business to elsewhere in the world, which isn’t an option available to most traditional businesses.

While both of these options might seem laborious, there is hope for UK startups. By taking advantage of the ‘team application’ element of the Tier 1 Exceptional Talent visa. UK tech companies can cut costs by bringing teams of up to five workers together. This will speed up the process and cut costs for companies and employees.