In the Media

New route for graduate entrepreneurs

PUBLISHED June 6, 2012

Friday 08 June 2012 by Laura Devine

On 6 April 2012, a number of changes to the UK Immigration Rules came into force. Among the significant reforms given effect at that time was the addition of a new scheme under the points-based system, Tier 1 (graduate entrepreneur).

The new route is being promoted as a means by which the UK will be able to retain up to 1,000 non-EEA/Swiss migrant graduates with exceptional entrepreneurial skills (but who do not meet the requirements for Tier 1 (entrepreneur)) by permitting them to extend their stay for up to two years. Although applicants do not require an employer sponsor, they will need to be endorsed by an approved UK Higher Education Institution (HEI) before they may apply.

Unlike other categories under the points-based system, individuals must apply for Tier 1 (graduate entrepreneur) from inside the UK by either switching into the route as initial applicants, or applying for an extension within the same category. It should also be noted that migrants whose previous immigration permission was under Tier 1 (post-study worker), Fresh Talent, or International Graduates Scheme or its predecessor are prohibited from switching into the scheme.

Approved ­institutions

In March, the government began ­inviting eligible HEIs to take part as endorsing institutions. To qualify, ­interested organisations must provide evidence that they are a Tier 4 highly trusted sponsor and A-rated for any Tier 2 and/or Tier 5 sponsor licences they hold. Additionally, institutions must demonstrate that they have 'established processes and competence for identifying, nurturing and developing entrepreneurs' among their undergraduate and postgraduate students.

Once the institution is confirmed by the UK Border Agency (UKBA) as an approved HEI, the subsequent role and responsibilities of identifying qualified graduates are placed solely on the institution. This entrusting of applicant assessment to third parties is similar to the government's approach under the other tiers of the points-based system (most recently, the Tier 1 (exceptional talent) scheme). Of note, the UKBA has not placed any criteria on how HEIs, once approved, are to identify these potential graduate entrepreneurs. While this approach promotes flexibility and allows applicants' qualifications to be evaluated by those best situated to do so, there is an obvious risk of discrepancies between, as well as within, institutions.

Participating HEIs will be expected to comply with certain duties and responsibilities, including, but not limited to, having established processes for identifying and developing entrepreneurs within the student population, as well as some monitoring, record-keeping and reporting duties. A list of approved HEIs is now ­available on the UKBA website.

Annual allocation

The government has imposed an annual limit of 1,000 endorsements for each of the new scheme's first two years, which run from 6 April 2012 to 5 April 2013 and from 6 April 2013 to 5 April 2014. Allotted places will be shared equally among the approved HEIs with no more than 10 approvals being given to any one institution. However, extensions for individuals whose previous leave was under Tier 1 (graduate entrepreneur) will not count toward this limit.


To qualify under Tier 1 (graduate entrepreneur), applicants must, in addition to meeting all other requirements of the Immigration Rules, score a total of 95 points (75 for attributes, 10 for English language and 10 for maintenance). Points may be obtained as follows:

  • Endorsement from approved UK HEI: before applying, individuals must obtain a letter of endorsement from an approved UK HEI (25 points for attributes).
  • Qualification: the original letter of endorsement from the approved HEI, among other relevant biographical details, must confirm that the HEI awarded the applicant a bachelors degree, masters degree or PhD from a UK-recognised body within the 12 months preceding the date of the endorsement. If applying for an extension, applicants may claim points if the endorsement is from the same institution which endorsed the previous grant of leave (25 points for attributes).
  • Business plan and applicant assessment: the endorsement must also confirm that the business plan is 'genuine, credible and innovative' and that the applicant will spend most of their working time engaged in developing that business. Those applicants applying for extensions may claim points if they have made progress in their business development and appear likely to qualify as Tier 1 (entrepreneur) within the next year (25 points for attributes).
  • English: applicants who demonstrate sufficient points for the above attributes will fulfil the English language requirement as a consequence of having obtained a degree-level qualification taught in English (10 points).
  • Maintenance: applicants applying for leave to remain before 14 June 2012 must demonstrate that they have had £800 or more of personal savings for 90 consecutive days prior to application. From 14 June 2012, this threshold amount will be raised to £900 (10 points).

Grants of leave

Initial Tier 1 (graduate entrepreneur) applicants who receive an endorsement from an approved HEI, and who meet all other requirements of the Immigration Rules, will be granted leave of up to one year. Thereafter, migrants may apply to extend their stay an additional year for a maximum total of two years under the category. For extensions, in addition to the requirements that must be met for initial applications, individuals must receive confirmation from their HEI that they have progressed in their endeavours such that they are likely to qualify as a Tier 1 (entrepreneur) within the next 12 months.

Migrants may not apply for settlement from this category, and time under the scheme will not count toward settlement for any future applications. It should also be noted that a Tier 1 (graduate entrepreneur) migrant's leave may be curtailed in the event that the sponsor loses its status as an endorsing institution, Highly Trusted Status under Tier 4, A-rated sponsor under Tier 2 or Tier 5, or withdraws the endorsement.

Switching categories

In tandem with the introduction of Tier 1 (graduate entrepreneur), new provisions took effect on 6 April to accommodate migrants who wish to switch from the new category into Tier 1 (entrepreneur). To do so, applicants will be required to evidence that at least £50,000 of their own money is available to invest into business in the UK. Funds may come from third parties' sources (including spouses and partners), and money already invested in business may be counted toward the required amount provided the total meets the £50,000 threshold.

Too little, too late

With the Conservative-led coalition government's aggressive push to reduce net migration, the available avenues for many talented and ambitious migrants to live, work and study in the UK have been shrinking rapidly. Proponents of this approach explain that these measures are meant to encourage growth, boost the economy and tackle abuse, while simultaneously attracting only the best and the brightest to our shores. Nevertheless, this protectionist stance signals to many that the UK is becoming progressively more anti-business, anti-student, and to some degree, anti-immigrant. Indeed, the danger in such systemic exclusionary reform is that instead of generating growth and advancing the economy, there will instead be an exodus and dramatic chilling effect.

While there are obvious benefits to the opening of new routes such as Tier 1 (exceptional talent) and the presently discussed Tier 1 (graduate entrepreneur), these additional schemes represe
nt but a fraction of the options that have been taken away. Moreover, the imposition of ­artificial annual caps on the number of permitted approvals is difficult to ­reconcile.

Just as it is hard to ­contemplate any good reason to limit the number of Nobel Prize- or Academy Award-winning migrants entering the UK, it is equally perplexing that the government would want to restrict how many innovative, ambitious and business-minded graduates may remain.

Laura Devine, Laura Devine Solicitors, while Matthew Meyer at the firm contributed to the article