Tax Planning in the UK with an Innovator Founder Visa

The United Kingdom remains a highly attractive destination for entrepreneurs seeking to establish innovative businesses, bolstered by a flexible immigration framework and opportunities for tax optimisation. The Innovator Founder Visa, introduced as part of the UK’s post-Brexit immigration reforms, has replaced older routes such as the Tier 1 Investor Visa and provides a pathway for high-net-worth individuals and business innovators to settle in the UK. Below, we explore the visa’s key features and how entrepreneurs can strategically plan their taxes in the UK.

The Innovator Founder Visa: An Overview

The Innovator Founder Visa, launched in 2023, is designed for experienced entrepreneurs with innovative, viable, and scalable business ideas. Unlike the Tier 1 Investor Visa, which was closed to new applicants on 17 February 2022, this visa requires active involvement in a UK-based business rather than passive investment. Key requirements include:

• Endorsement: Applicants must obtain an endorsement from an approved UK endorsing body, confirming the business idea’s innovation, viability, and scalability.

• Investment: A minimum investment of £50,000 is typically required, though this may vary depending on the business plan.

• Active Role: Applicants must actively manage and develop their UK business, demonstrating a commitment to economic contribution.

• Pathway to Settlement: The visa permits a stay of up to 3 years, with the possibility of extension or applying for Indefinite Leave to Remain (ILR) after 3–5 years, depending on business success and economic impact.

  
  

The closure of the Tier 1 Investor Visa shifted the UK’s focus towards active entrepreneurship, aligning with government priorities in sectors such as technology, clean energy, and life sciences. Entrepreneurs seeking residency must now demonstrate tangible contributions to the UK economy, making the Innovator Founder Visa a primary route for business-minded investors.

Tax Planning for Entrepreneurs

The UK’s tax system offers opportunities for entrepreneurs to optimise their financial strategies, particularly during the initial years of residency. Recent reforms, including the abolition of the non-domicile regime in April 2025, have reshaped tax planning for new residents. Below are key considerations:

1. Tax Residency and the 4-Year Foreign Income and Gains (FIG) Relief

Under the new residence-based tax system, individuals who become UK tax residents can benefit from a 4-year Foreign Income and Gains (FIG) relief period. During this period, foreign income and capital gains are exempt from UK tax, provided they are not remitted to the UK. This replaces the former non-domicile regime, which allowed non-domiciled residents to use the remittance basis for longer periods with Remittance Basis Charges (£30,000 or £60,000 after 7 or 12 years). The new system simplifies tax planning but limits relief to four years, requiring careful financial structuring.

Key Strategy: Entrepreneurs should structure their finances before arriving in the UK, ensuring “clean capital” (funds free of UK tax liability) is available for UK expenditure. Avoid remitting foreign income or gains during the FIG relief period to minimise tax liability.

2. Business and Investment Tax Planning

Entrepreneurs on the Innovator Founder Visa must actively manage a UK business, which introduces additional tax considerations:

• Corporation Tax: UK businesses are subject to a corporation tax rate of 19%–25% (depending on profits as of 2025). Entrepreneurs should optimise business structures, such as using limited companies, to leverage tax allowances and deductions.

• VAT: If the business exceeds the VAT registration threshold (£90,000 annual turnover as of 2025), VAT compliance is essential. Early registration may be beneficial for reclaiming input tax on business expenses.

• Personal Income: Dividends, salaries, or other income from the UK business are subject to UK income tax. Entrepreneurs can use tax-efficient remuneration strategies, such as combining salary and dividends, to reduce personal tax liability.

• Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS): These schemes offer tax reliefs for investors in qualifying start-ups, which may apply to entrepreneurs funding their own ventures or attracting external investment.

  
  

3. Transition to Full UK Taxation

After the 4-year FIG relief period, entrepreneurs are taxed on their worldwide income and gains, aligning with UK-domiciled residents. This shift requires long-term planning, particularly for those pursuing ILR, which requires a 5-year continuous residency period under the Innovator Founder Visa (or 3 years for exceptional business success). Entrepreneurs should assess whether long-term UK residency aligns with their financial goals or if alternative jurisdictions offer more favourable tax outcomes.

Why Seek Expert Advice?

Navigating the UK’s tax and immigration systems is complex, particularly with the transition to the Innovator Founder Visa and the new residence-based tax regime. Expert guidance is essential for:

• Visa Compliance: Securing endorsement and meeting Home Office requirements for visa extensions or ILR.

• Tax Optimisation: Structuring finances to maximise the 4-year FIG relief period and minimise tax liabilities on UK and foreign income.

• Business Structuring: Establishing tax-efficient business models, including compliance with corporation tax, VAT, and employment regulations.

• Long-Term Planning: Preparing for full UK taxation and potential permanent residency applications.

  
  

Foundry Accounting experts can guide you through the intricacies of UK tax and immigration law, helping you select the optimal strategy for your entrepreneurial journey. Contact us for tailored advice on tax planning for the Innovator Founder Visa.