Unravelling UK immigration policy for tech:  Options and obstacles for startups

Options for individual tech founders

Tech founders relocating to the UK currently have two main options:

• Global Talent (Tech Nation) visa: 
  The threshold is high for endorsement (applicants must prove they are recognised leading figures in the digital tech space), and the criteria is focused on product-led digital tech companies. 
  
  
• Innovator Founder visa: 
  The Innovator Founder route is available to applicants who have a business plan that is innovative, viable and scalable. However, successful entrants face overly prescriptive requirements at the settlement (indefinite leave to remain) stage, meaning it can often be difficult to complete an immigration journey.
  
  

Key immigration questions for growing start-ups

• Do you need a sponsor licence? 
  For a business to hire someone from abroad, the company most likely will need to obtain a Skilled Worker sponsor licence and sponsor each migrant worker it wishes to hire. It is important the business understands its obligations as a sponsor.
  
  
• Can you meet the Skilled Worker minimum salary requirement? 
  On 04 April 2024, the former government dramatically increased how much sponsors need to pay Skilled Workers. For new hires the general salary threshold went up by nearly 50% from GBP 26,200 to GBP 38,700, and the going rates (salaries for different occupation codes/job types) increased from the 25th percentile to the median. Data from Nation better shows that 37% of tech start-up workers won’t meet the new salary requirement. 
  
  
• How expensive is it? 
  A lot of start-ups initially employ young talent on a temporary visa. However, after that the costs for keeping them will be significant. The fees associated with sponsorship as well as the increased salary costs may be unaffordable. Businesses can expect in excess of a 50% increase in costs per sponsored worker.

Does the UK have a competitive offer for tech talent?

It’s unavoidable that increasing sponsorship costs and not introducing fully flexible routes make it harder for UK companies to compete in global markets. From speaking to our clients in the tech sector we know the impression this gives is problematic. Whilst they understand the UK has great homegrown talent, these barriers highlight an unattractive and unsupportive attitude to business needs and short-sightedness to the fact that the tech sector needs talent now.

Although there are many reasons the UK remains an attractive ecosystem for entrepreneurs, there are a lot of other growing tech ecosystems where founders might choose to go. It looks like they are already starting to do so, as the percentage of fast-growing start-ups in the UK founded by immigrant founders dropped from 49% to 39% between 2019 and 2023.

The challenge for the new Labour government is to come up with more flexible policies to give start-ups confidence over their own and their companies’ futures.

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Ilda de Sousa is a partner in the immigration team at Kingsley Napley. Ilda has more than ten years of UK corporate immigration law experience, managing large company clients as well as handling complex matters for individuals, British nationality applications, appeals, judicial reviews and applications under European Law including Brexit related advice.

Tim Richards is a solicitor with extensive experience in corporate and private client immigration matters and is responsible for the immigration team’s knowledge management and development.