An HMRC EMI share valuation should explain the value of the shares employees may acquire, using the company’s circumstances and share rights at the relevant date. It is not a process of choosing the lowest possible exercise price or applying a standard discount.
This guide focuses on the valuation evidence and HMRC agreement process. For an engagement covering analysis, reporting or a submission, see HMRC share valuation services. For grant administration, see the EMI options and reporting guide.
Government guidance checked on 23 October 2026. Eligibility and filing obligations depend on the company, relevant dates and facts.
Start with the share interest and valuation purpose
Record the company, proposed grant date, share class, number of shares and rights attached to them. Review the articles, shareholder agreement, cap table, restrictions and any investor preferences. A headline enterprise value is not automatically the value of the ordinary shares under option.
The evidence pack should show what information was available at the valuation date. Later trading or a financing event may help explain a change in circumstances, but should not be silently substituted for the facts at that date.
Actual market value and unrestricted market value
HMRC’s share-scheme valuation guidance requires proposals for actual market value and unrestricted market value where restrictions affect the shares. Its EMI valuation manual explains the approach and confirms that advance agreement is voluntary.
Keep company valuation, allocation across share classes and the effect of restrictions as distinct steps. The report should let the reader understand each judgement. Do not confuse a share’s nominal value with its market value.
Prepare evidence that can be followed
- Recent statutory and management accounts, with material differences explained.
- A coherent forecast and the assumptions management can support.
- Customer revenue, recurring revenue and cash information where relevant.
- The cap table, option pool, articles and shareholder rights.
- Recent share issues, transfers, offers or financing discussions and their terms.
- A clear explanation of methods, sensitivities and material uncertainty.
Why a funding price or standard discount can mislead
A recent funding round can be relevant evidence, but investors may have liquidation preferences, conversion rights or other protections. The ordinary share interest under an employee option may differ. Explain the transaction terms, timing and company developments before deciding how much weight to give the price.
Minority holdings and restrictions should be assessed on the evidence. There is no automatic 50% or 75% deduction that makes every EMI proposal correct. The objective is a supportable conclusion for the specified shares and purpose.
Seek agreement using the relevant HMRC route
HMRC identifies VAL231 for EMI proposals. Assemble the supporting documents, ensure the proposed values reconcile to the report and record the submission and correspondence. Answer questions using the same version of the accounts and cap table, explaining subsequent changes.
Advance agreement is not a requirement to grant EMI options. It also does not amount to clearance of all scheme conditions. The company needs to assess the separate eligibility, documentation and reporting requirements.
Correct timing: 90 days from agreement
The 90-day validity period begins on the agreement date, not the earlier valuation date. Keep the letter with the grant records, note the relevant dates and reassess any material event before relying on the agreed figure. Do not treat our report timetable as an HMRC response commitment.
Check the 2026 limits separately from value
For most companies from 6 April 2026, HMRC increased the company option limit to £6 million, the gross-assets limit to £120 million and the employee limit to fewer than 500. Specified Northern Ireland companies and relevant group situations require separate consideration. Consult HMRC’s 2026 limits and exercise-period guidance before assuming the changes apply.
A company falling within a size limit is not automatically eligible. Check all relevant conditions and the employee’s position with the appropriate adviser. Keep this eligibility assessment separate from the valuation conclusion.
A practical pre-grant control list
- Confirm the intended shares and final legal documents match the valuation instruction.
- Record the valuation date, report version and any HMRC agreement date.
- Investigate funding, trading or share-right changes before grant.
- Agree who approves the exercise price and grant documentation.
- Assign responsibility for the grant notification and annual ERS return.
Frequently asked questions
What is an HMRC EMI share valuation?
It is a valuation of the relevant shares for an Enterprise Management Incentives option grant. The analysis considers the company, share rights, restrictions and valuation date. HMRC offers a route to seek advance agreement, but that agreement is not compulsory.
Does the 90-day period run from the valuation date?
No. HMRC states that EMI valuations are valid for 90 days from the date of the agreement. Read the agreement letter and review any material change before relying on it for a grant.
Which form is used to seek EMI valuation agreement?
HMRC specifies form VAL231. Where restrictions affect value, the proposal needs actual market value and unrestricted market value. The supporting information should explain the company and the relevant share rights.
Is the last funding-round price the EMI share value?
Not automatically. Investors may hold shares with different rights, and the financing date or company circumstances may differ. Explain the relevance of the funding evidence and any adjustment rather than copying the price.
Is there a standard minority-share discount?
No fixed discount is appropriate for every company or share class. The analysis must reflect the rights, restrictions, valuation purpose and supporting evidence. A percentage should be justified rather than selected to reach a preferred exercise price.
Does HMRC agreement confirm the whole EMI scheme qualifies?
No. Agreement on value does not establish every company, employee, option or reporting condition. Eligibility, documentation, grant notifications and ongoing administration need separate attention.
Can you help prepare the valuation and submission?
Consult EFC offers scoped HMRC share valuation support. The engagement states the purpose, information required, report, submission work and any follow-up included. HMRC response timing and agreement are outside our control.
Discuss the valuation scope
Tell us the company, share class, proposed grant timing and available information. We will confirm the valuation purpose, deliverables, submission support and fee before work begins. View the HMRC share valuation service.
About the author: Kishen Patel ACA, founder of Consult EFC. View the ICAEW member profile.
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Over 12 years across Big Four audit, Investment Banking, and corporate advisory. Kish works with SaaS founders, tech companies, and ambitious UK SMEs from £1M to £50M in revenue on fundraising, valuations, exit planning, and financial strategy. ICAEW regulated. Big Four trained. Based in London.