ideastack·8 min read·
AMV vs UMV: the HMRC EMI valuation maths walkthrough for a UK SaaS founder (April 2026 expansion edition)
AMV (Actual Market Value) and UMV (Unrestricted Market Value) are the two share prices HMRC wants on every EMI grant - and getting the gap between them right is what turns a GBP 20k EMI grant into a defensible 35-point tax swing for your first hire. This walks the April 2026 expansion (GBP 120m gross-asset cap, 500-headcount cap, GBP 6m total-pool cap), the minority-discount / restriction-discount stack, and worked GBP arithmetic at a GBP 750k pre-money valuation so you can see both sides of the maths.
There are two share prices on every EMI option grant and HMRC wants to see both: AMV (Actual Market Value) and UMV (Unrestricted Market Value). The gap between them is where the tax saving lives. Get the gap right and a GBP 20,000 EMI grant for your first hire turns into a 35-point swing in their favour at exit - 10% Business Asset Disposal Relief instead of 47% income tax plus NI. Get it wrong and HMRC quietly disqualifies the grant, the relief evaporates, and your hire ends up paying 47% on the gain.
Search "EMI AMV UMV valuation" and the first page of results is paid services - SeedLegals' valuation widget, Vestd's HMRC submission tool, FounderCatalyst's bundled scheme, and the Big-4-tier valuation memos at GBP 1,500-3,000 a pop. They all assume the founder has already raised enough to spend on professional fees. The actual question for a UK indie hacker who has just incorporated, raised GBP 75k SEIS, and is hiring their first dev is: what is HMRC actually looking at, can I do this myself, and where is the line where it stops being worth saving the GBP 800?
This post walks the AMV vs UMV definitions, the April 2026 EMI expansion limits, the minority-discount and restrictions-discount stack, and worked GBP arithmetic on a 100,000-share company at a GBP 750k pre-money valuation so you can see both sides of the maths.
What AMV and UMV actually are
Two HMRC concepts, two different jobs.
AMV - Actual Market Value. The price a willing buyer would pay a willing seller for the specific shares being optioned, taking into account every restriction that attaches to those shares. AMV is the price HMRC uses to set the strike on the EMI option. Strike must be at least AMV at grant, otherwise the grant fails the EMI tests.
UMV - Unrestricted Market Value. The same shares stripped of all restrictions - as if they were freely tradeable, no transfer restrictions, no drag-along, no pre-emption rights, no leaver clauses. UMV is always equal to or higher than AMV. UMV is the figure HMRC uses to measure the GBP 250,000 individual cap and the GBP 6m total option pool cap.
In plain English: AMV is what HMRC says the share is worth today as an actual restricted EMI share. UMV is what the same share would be worth if it were as tradeable as a public-market share. The difference between them is the restrictions discount.
Why the gap matters
The gap between AMV and UMV is the structural reason EMI exists.
If AMV equals UMV (no restrictions discount), the strike price equals the unrestricted value and the option-holder gets the full upside above strike, taxed at 10% BADR. Good for the employee, neutral for the company.
If AMV is materially below UMV (large restrictions discount), the strike is set at the lower AMV but the GBP 250k individual cap is measured at the higher UMV. Practical effect: more options can fit under the cap than the headline price suggests, and the entire UMV-vs-AMV gap accrues to the option-holder as additional upside, also taxed at BADR.
Worked example: AMV is GBP 0.075 per share, UMV is GBP 0.10 per share. A grant of 250,000 shares is GBP 18,750 at AMV (well under the GBP 250k cap) and GBP 25,000 at UMV (also well under). The option-holder pays GBP 18,750 strike at exercise and gets the full GBP 25,000 of unrestricted value plus any subsequent appreciation. The GBP 6,250 gap is structural tax-free upside.
The April 2026 EMI expansion - the numbers that changed
The April 2026 changes are the first substantive EMI expansion since the scheme launched in 2000. The headline:
| Limit | Pre-Apr 2026 | Post-Apr 2026 |
|---|---|---|
| Company gross assets | GBP 30m | GBP 120m |
| Company headcount | 250 employees | 500 employees |
| Total option pool (per company) | GBP 3m | GBP 6m |
| Individual grant cap (per employee) | GBP 250k | GBP 250k (unchanged) |
For an indie SaaS founder running the AMV/UMV maths, the GBP 6m total-pool ceiling matters most. It is measured at AMV at grant, cumulatively, across every grant the company has ever made. Hit GBP 6m and no further EMI grants can be issued (the next ones fall outside EMI and back to unapproved option treatment).
For a 5-year horizon to a Series A team of 30-50 people, GBP 6m is comfortable. For a fast-growing company hitting 100+ people in 3 years, the ceiling becomes a real constraint and you start having to think carefully about grant size on each new hire.
The HMRC valuation pack - what they actually want
The AMV / UMV agreement with HMRC is filed via Form VAL231 to the Shares and Assets Valuation team. The valuation team is small (a few dozen valuers) and they look at thousands of these a year. The pack they want is short:
- Cap-table snapshot at the date of grant - founders, ordinary shares, any preference shares from a SEIS round, total shares in issue.
- Most recent funding round detail - if you raised SEIS at GBP 750k pre-money 2 months ago, that round is the anchor. Round date, pre-money valuation, amount raised, post-money valuation, share price.
- Comparable transactions - the same as the above, ideally. If no funding round, comparable transactions in similar UK SaaS companies. HMRC accepts BVCA-published valuation data and recent published rounds for similar-stage SaaS.
- Restrictions schedule - the specific restrictions that attach to the EMI shares. Transfer restrictions, drag-along, pre-emption, good/bad-leaver provisions. This is the input to the restrictions discount.
- Dilution scenarios - how the cap table changes if the full option pool is exercised. Used to confirm the per-share AMV after dilution.
For a typical UK SaaS post-SEIS, this is a 4-6 page memo with a one-page cap-table appendix. A SeedLegals or Vestd template handles 80% of it. A startup-savvy lawyer for a bespoke memo runs GBP 800-1,500.
Worked example: 100k shares, GBP 750k pre-money
Let's walk a concrete UK indie SaaS at the point of the first EMI grant.
Cap-table inputs:
- Founders' ordinary shares: 80,000 (80%)
- SEIS angel ordinary shares: 10,000 (10%, GBP 75k for 10% at GBP 750k pre-money)
- Unallocated option pool: 10,000 (10%)
- Total shares in issue: 100,000
UMV calculation:
The most recent transaction is the SEIS round at GBP 750k pre-money / GBP 825k post-money. Post-money / total shares = GBP 825,000 / 100,000 = GBP 8.25 per share. That is the UMV for an unrestricted ordinary share.
AMV calculation - the discount stack:
AMV applies two discounts to UMV:
| Discount | Typical range | Worked figure |
|---|---|---|
| Minority discount | 20-40% (for non-controlling stakes) | 25% |
| Restrictions discount (transfer, leaver, drag) | 10-25% | 20% |
Combined discount factor: (1 - 0.25) x (1 - 0.20) = 0.60. So AMV = UMV x 0.60 = GBP 8.25 x 0.60 = GBP 4.95 per share.
Worked grant for first hire:
| Line | Detail |
|---|---|
| Grant size at AMV | GBP 20,000 |
| Number of options | GBP 20,000 / GBP 4.95 = 4,040 options |
| Strike price | GBP 4.95 (set at AMV) |
| UMV of the same options | 4,040 x GBP 8.25 = GBP 33,330 |
| Implied tax-free gap at exercise | GBP 33,330 - GBP 20,000 = GBP 13,330 |
| Used against GBP 250k individual cap (measured at UMV) | GBP 33,330 |
| Headroom remaining under cap | GBP 216,670 |
The GBP 13,330 gap is the structural restrictions-discount value the employee captures - on top of any subsequent appreciation between grant and exit.
What HMRC pushes back on
HMRC's Shares and Assets Valuation team is pragmatic, not punitive. The three reasons they reject or counter a VAL231 submission:
- No comparable transaction. If there is no recent funding round and no published comparable, HMRC will counter with their own figure derived from sector benchmarks. The SaaS benchmarks they use are public - typical 4-6x revenue for early-stage UK SaaS, lower for pre-revenue.
- Discount stack too aggressive. A combined discount above 50% on a recent-round-anchored valuation gets a counter. The 25% minority + 20% restrictions stack above (60% retained value) is in the safe zone. 30% minority + 30% restrictions (49% retained value) starts to attract scrutiny.
- Stale anchor round. A funding round more than 12 months old is treated as stale. HMRC will ask for an updated valuation showing why the value has not changed (or has changed) since.
The agreement turnaround is typically 3-6 weeks. Once agreed, the AMV / UMV figures are valid for 90 days for new grants. After 90 days you need a fresh agreement.
Free vs paid valuation tools - where the line is
Three options for the indie hacker:
Option 1 - Free DIY. Build the VAL231 pack from your cap table and most recent funding round. Apply standard discounts (25% minority, 20% restrictions). Submit directly to HMRC. Works fine for a clean post-SEIS company. Cost: zero, plus 4-6 hours of your time.
Option 2 - SeedLegals or Vestd valuation widget. Walks you through the same inputs, generates the VAL231-shaped memo, you submit. Cost: GBP 200-400. Saves 3-4 hours and removes the formatting risk.
Option 3 - Bespoke valuation memo from a startup-savvy accountant. Full memo with comparables analysis, sensitivity scenarios, restrictions schedule. Cost: GBP 800-1,500. Worth it if you have heavy services revenue, a complex cap table with multiple share classes, or an unusual restrictions package.
For a clean post-SEIS UK SaaS with one round, one share class, and standard restrictions, Option 1 or Option 2 is fine. The HMRC team is genuinely receptive to founder-prepared submissions when the inputs are sensible.
The GBP 6m total-pool ceiling - how it constrains year-2 grants
The GBP 6m cap is the biggest planning lever from year 2 onwards. Worked illustration:
- Year 1: 1 hire, GBP 20,000 grant at AMV. Cumulative pool used: GBP 20k. Remaining: GBP 5.98m.
- Year 2 (post Series A at GBP 5m pre-money): 8 hires, GBP 40,000 average grant at higher AMV. Cumulative pool used: GBP 340k. Remaining: GBP 5.66m.
- Year 3 (post Series B at GBP 25m pre-money): 30 hires, GBP 80,000 average grant at higher AMV. Cumulative pool used: GBP 2.74m. Remaining: GBP 3.26m.
The ceiling only really bites when the company is at Series B+ and granting 6-figure AMV options at scale. For an indie SaaS in years 1-3 the constraint is academic - but it is worth modelling forward, because once you cross the ceiling there is no recovery: the next grant falls back to unapproved options at the 35-point higher tax cost.
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Frequently asked
Can I set the EMI strike price below AMV?
No. EMI rules require the strike price to be at least AMV at grant. Strike below AMV is not a slightly-worse grant - it disqualifies the entire option from EMI treatment, and the grant is taxed as an unapproved option (income tax at up to 45% plus NI on the gain). The strike-equal-to-AMV rule is the cleanest line in the EMI regime; do not cross it.
How long does an HMRC AMV / UMV agreement stay valid?
90 days from the date of agreement. Any grant made within 90 days uses the agreed AMV / UMV figures. After 90 days, you need a fresh agreement, even if nothing has changed. Most companies time their valuation agreement to coincide with the planned grant window - submit the VAL231 4-6 weeks before the planned grant date so the 90-day clock covers the actual grant.
Does the April 2026 expansion affect existing EMI grants?
No - existing grants keep their original terms, original AMV, original strike. The expansion applies only to grants made on or after 6 April 2026. Practically this means a company that hit the old GBP 30m gross-asset ceiling in early 2026 and stopped granting EMI can resume granting from April 2026 onwards under the new GBP 120m ceiling.
Can I apply a higher restrictions discount than 20%?
Yes, if the restrictions package genuinely warrants it. A heavy drag-along plus a hard transfer lock plus a 5-year leaver-clawback can sustain a 30% restrictions discount. HMRC will look at the actual restrictions schedule. The risk in pushing the discount above 25% is HMRC counter-proposing - which adds 4-8 weeks to the agreement timeline. For most indie SaaS first grants, the standard 20% is the path of least resistance.
What happens if HMRC rejects the VAL231 submission?
HMRC very rarely rejects outright. The normal response is a counter-figure - they propose an alternative AMV / UMV. You can accept (resubmit at their figure), counter back (with additional comparables or a revised restrictions argument), or escalate to a formal valuation tribunal (rare, expensive, slow). For a clean indie SaaS post-SEIS submission with sensible discounts, the counter rate is in the single-digit percent. Most submissions clear first time.
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