Launch of new Scale-up Visa

On 22 August 2022, the Home Office launched a new Scale-up visa route for high-growth UK companies to recruit highly-skilled talent from overseas. The new visa offers more flexibility and agility than the current Skilled Worker and Global Business Mobility Senior and Specialist Worker visa routes.

Commenting on the new visa route, Irene Graham OBE, CEO of the ScaleUp Institute, said:

"This [visa] is something we have recommended since our inception and should provide a much-needed fast track service to enable local growth companies to access the talent they need more quickly.

Scaleups add over £1 trillion a year and more than three million jobs to the UK economy, and are present in every community, hiring people from at home and abroad, as they drive growth into their local areas and beyond.

The visa should help with the skills demands."

Recognising the importance of Scale-Up businesses in the UK, Paul Scully MP, the Parliamentary Under-Secretary of State for Small Businesses, Consumers and Labour Markets has said, "Scaleups are crucial for driving job creation, generating inward investment for the UK and acting as motors for regional economic growth".

What is a Scale-up?

Scale-up is an important phase of rapid and significant company growth. The Home Office defines a scale-up as a company that has achieved growth of at least 20 per cent in terms of turnover or headcount year-on-year for at least three years and employed at least 10 people in the same time period.

To be eligible to sponsor employees under the Scale-up visa route, a UK company must be able to demonstrate such a sustained period of growth and evidence that sponsoring talent from outside of the UK is necessary to continue this growth.

Why use the Scale-up visa?

Under the UK's most utilised work permit visas, the Skilled Worker visa and Global Business Mobility Senior and Specialist Worker visa, sponsored workers may only work for the sponsoring company in the specific role declared in the visa application.

The new Scale-up visa route, on the other hand, allows the sponsored worker to work in their sponsored role, as well as in other roles for the sponsor. After six months, the Scale-up worker can work for other organisations in the UK, including those without licences to sponsor workers. Scale-up workers can also undertake self-employment. This flexibility to change roles and employers has been designed to help ensure fast-growing organisations have access to highly talented individuals required to drive business and sustain growth.

Additionally, whereas medium or large sponsors must pay an immigration skills charge of £1,000 per year of sponsorship for Skilled Workers or Global Business Mobility Senior and Specialist Workers, leading to a minimum cost of £5,000 per sponsored worker to reach Indefinite Leave to Remain (also known colloquially as "permanent residency"), this charge is not applicable to Scale-up sponsors who only have to sponsor workers for six months. Since the sponsorship period is short, Scale-up sponsors also have a shorter period of sponsorship obligations for sponsored workers than Skilled Worker or Global Business Mobility sponsors.

What do Scale-up businesses need to do?

To sponsor workers under this route, UK-based Scale-ups must apply to the Home Office for a Scale-up sponsor licence. The licence will be valid for four years and is not renewable, as the Scale-up phase of growth is a temporary period for companies.

To apply for the sponsor licence, the company must evidence that it meets the annualised growth criteria of 20 per cent for the last three years either through turnover or headcount and that it had at least ten employees at the start of the three-year period. Additionally, it must have at least 37 months' worth of HMRC history and be able to demonstrate that it is a genuine company which is active and trading and that it needs the Scale-up workers to sustain growth.

Companies which already hold a valid sponsor licence do not need to apply again for a new licence. Instead, they can apply to add Scale-up to their existing licence as an additional sponsor route. While such companies will not need to provide evidence to support their applications, they will need to ensure their HMRC filings are up to date as the Home Office will use HMRC records to check the Scale-up criteria is met by the company. Additionally, they should ensure all PAYE references through which their employees are paid are listed on their sponsor licence.

What is required for the Scale-up visa?

Once the Scale-up sponsor licence is in place, the company will then be able to assign a Certificate of Sponsorship ("CoS") to the worker they wish to sponsor for employment in the UK. In order to assign the CoS, the role the potential employee will undertake must be at least a graduate level role. The salary must meet whichever is the higher of £33,000 per annum, £10.10 an hour or the "going rate" for the role as determined by the Home Office.

Once the CoS has been assigned, the potential employee can apply for a Scale-up visa. As part of the application, the potential employee must be able to prove that they have English language skills at CEFR level B1 (an intermediate level) or above in speaking, listening, reading and writing.

The initial Scale-up visa will be granted for a period of two years. During this period, the Scale-up visa holder must work for the company sponsoring them for at least six months. After six months, the Scale-up visa holder could continue to work for their sponsor or choose to work for any company without the need for sponsorship or undertake self-employment. Before their visa comes to an end, the Scale-up visa holder must apply to extend their visa. The visa will be extended for three years provided the Scale-up visa holder can demonstrate PAYE earnings in the UK equivalent to at least £33,000 per annum (i.e. £2,750 per month), during at least half of their time in the UK with permission as a Scale-up worker. This means that if the Scale-up visa holder is extending their visa after two years' in the UK, they must have earned a monthly salary of at least £2,750 for at least 12 months. If they are extending after five years in the UK as a Scale-up visa holder, then they must have earned a monthly salary of at least £2,750 for at least two and a half years.

It is important to note that the Home Office will only take into account gross earnings recorded through PAYE when calculating salaried earnings and while self-employment is permitted, any self-employment earnings will not be counted since they are not paid through PAYE. Additionally, the Home Office will expect to see earnings of at least £2,750 a month and this cannot be "bumped up" by earning more in other months. Salaries from different employments cannot be combined to meet this monthly minimum, even though Scale-up visa holders may hold several jobs at once. As such, at least once job must have a monthly salary of at least £2,750 to be counted.

After five years in the UK, the Scale-up visa holder may qualify to apply Indefinite Leave to Remain (ILR) in the UK. To be eligible to apply for ILR, the Scale-up visa holder must meet a higher earning threshold and be able to demonstrate earning a gross annual salary of at least £33,000 on the date of application and for at least 24 months of the three-year period immediately prior to the ILR application. In line with the visa extension application, this must be PAYE earnings from UK salaried employment.

The Start-up visa certainly provides flexibility for the visa holder in terms of working in the UK. While the sponsoring company benefits from only having a six-month period of sponsorship responsibility for the Start-up visa holder, there is an element of having less control over the talent being recruited through this visa route initially since, after six months, they are able to leave the sponsor's employment.

The Scale-up visa is only one of many options available to UK businesses to recruit and retain talent from outside of the UK. Employers seeking to recruit global talent, or to establish business in the UK, may also consider the following options: