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Step-by-step guide to applying for an EMI Valuation using the price per share of your last round

We at SeedLegals wouldn’t be doing our jobs if we didn’t warn you of the major drawbacks of using the price per share (PPS) of your last round to create your EMI Valuation:

First off, it contradicts the definition of “sweat equity”, as your employees are paying the same price to exercise their options as your investors have paid for their shares. As employees are getting their options as part remuneration, in lieu of salary, they would typically get their shares for as little as possible, not paying the same premium that investors pay to get their return without contributing any labour. For this reason, it’s not the best way to incentivise your employees.

Secondly, it might end up being prohibitively expensive. The purpose of the EMI Valuation is to agree a strike price with HMRC so that as long as your employees pay it, they won’t owe any income tax and only 10% CGT. But this is because they’ll actually need to pay the strike price to get the shares in the company. If you are using the PPS of your last round and it’s £5 per share and you’re awarding 2000 options, that’s £10,000 the employee needs to find to buy their shares. Hopefully, when the company is acquired they’ll get a great return, but it’s still a considerable sum for your employees to pay upfront. If your company has just incorporated, has no revenue and no assets, you’ll be doing a nominal value valuation and the total amount due will be very low. However, in any other case, it’s worth doing a quick calculation to work out what you’re actually asking your employees to pay upon exercise.

So that said, if now you’re looking to give proper sweat equity and save your employees a lot of money, you can purchase the SeedLegals Valuation Tool and you’ll find our step-by-step guide to complete it here.

If you’re going with the price per share of the last round, here are the next steps:

Getting Started

Before we get started, your cap table on SeedLegals MUST be updated with all of your funding rounds - please look at this article (How to set up and edit your cap table) if you need help with this.

Step 1: Add an option pool

Your dashboard will look like the below.

Choose 'Create a new option pool' if you need to get approvals from shareholders/investors/board to create an option pool - we will provide you with those docs. Please see this article on how to create a new option pool: How to create an option pool.

Choose 'Add an existing option pool' if you have already have the necessary shareholder and investor consents for the pool.

Step 2: Add an EMI scheme

If you haven't already, then please create a new EMI scheme. You will want to select B Ordinary (Non-Voting) as the share class unless otherwise decided. To do so click Add new share class under the drop down menu and select the Employee share class.

Set the details of the scheme on this page where it says Set Details. You should set these details first before proceeding. You can always come back and change the details anytime before the final step of adopting the scheme rules. If you do not have the share class set up in your articles already, reach out so we can help you with the resolution.

Please see this article to help you set up the scheme rules: Which option scheme is right for you?

Click Create after you set the rules.

Step 3: Enter valuation details

Company and contact details

  • Leave SCEC reference number blank if you do not know this or do not have one

  • Please fill in the questions with background on your company. HMRC would like to have a holistic understanding about what your company does, the challenges it faces and who the founders are.

  • Enter the email address and phone number of a director



  • For the UMV (Unrestricted Market Value) price per share and AMV (Actual Market Value) price per share, enter the price per share of your last round.

Share transactions

  • Enter the number of EMI options you are planning on granting under this valuation.

  • For the question, Do you have an EMI Valuation Report?, please answer No.

  • For the question, Have any shares been allotted since the date of the last company accounts?, please look at the date of your last accounts on Companies House and enter the details of any shares allotted since then. If you have never filed accounts on Companies House you should enter all the shares you have issued from Incorporation. You should enter this in the format, “X Ordinary shares were issued on 1st January 2021 at a price per share of £7.45”

  • For the question, Have any shares in the company been bought or sold within the last year? this refers ONLY to share transfers - not funding rounds or share allotments. Again you should enter in the format, “X Ordinary shares were transferred on 1st January 2020 for a price per share of £7.45”

  • For the question, Have any dividends been paid or declared after the date of the last accounts? Select the appropriate response and add a sentence with the amount paid and the recipient.

  • For the question, Is there a prospect that there will be an opportunity for shares to be sold or exchanged? Or is there a prospect of a flotation or other marketing event? Add the appropriate response.

  • For the question, Any other information that you consider relevant to your valuation?, complete and add the following line “We are applying for a EMI valuation based on the price at our last round, £X per share.”

Cover Letter

  • No need to add anything special in the cover letter unless you feel like telling HMRC something specific about your application.

  • You should display the cap table in the cover letter unless you are attaching your own separate version.

Click Done!

Step 4: Enter your exercise price

You will see you are now given an AMV and UMV at the top of the page. Click Enter price to set your exercise price for the EMI options.

We recommend setting your exercise price to your AMV so that a taxable exercise does not occur. You are welcome to set it to nominal value, but just know that this will trigger a taxable exercise event.

When you click Enter price, it will autofill with the AMV. If you are happy with that, click the check mark.

Step 5: Sign all documents

As per the screenshot above, please click the Sign button - this will automatically sign the VAL 231 form and cover letter.

The documents must be signed by a director of the company.

Then click Next.

Step 6: Sending your valuation to HMRC

You can then email your application to HMRC.

Download your application bundle from this page:

And send your VAL 231 form and Cover Letter to HMRC at savexternal.mailbox@hmrc.gov.uk. Please also cc emi-options@seedlegals.com to ensure the team is copied in all communication with HMRC. They will reply by email in about 4 weeks, so keep an eye out for it.