Policy 3: Reduce the Tier 2 Visa Salary threshold and allow stock options to be considered in visa applications

In collaboration with The Coalition for a Digital Economy (Coadec), we have produced a manifesto to make Britain the best place in the world to start and grow a business. It features 21 policies across three key policy areas: access to talent, access to investment, and regulation. Over December, we’ll be sharing one policy every day. To read the full manifesto, click here.

The current salary requirement of £30,000 for Tier 2 Visas has proved difficult for startups to meet because many people are paid less in the early stages of a company. ONS data shows that 46.1% of people employed in technical jobs receive a salary of less than £30,000, which makes it difficult for startups to hire at junior and mid-level positions, as those salaries fall below the threshold. These positions cannot be filled easily via the Tier 1 Exceptional Talent Visa either, which leaves a hiring gap for many companies.

It would be preferable for the salary threshold to be lowered to around £21,000, which 25.3% of employees in technical jobs and 39.2% of all people in full-time employment earn less than.

Stock options form an important part of the compensation packages offered by startups, as equity is often offered to key hires in lieu of a higher salary, in order to moderate operational costs at the beginning of a startup’s lifecycle. There is no reason why their value should not be taken into account for the salary thresholds in visa applications, especially since they are already used for other reporting criteria such as gender pay gap reporting. It would be reasonable to expect the equity to be written into the employment contract and worth under 30% of the total compensation package.

Startups are able to compete against big tech companies for domestic top-tier talent by offering equity in lieu of a higher salary. They should be given the same level-playing field when seeking to hire from abroad.