EMI Valuation Validity: What Happens After 90 Days?

An HMRC-agreed EMI valuation has been obtained, but the option grant is delayed beyond 90 days. That creates a practical compliance issue: the valuation isn’t a permanent approval, and the company may no longer be able to rely on the agreed share value when the options are finally granted.

The 90-day period runs from the date of HMRC’s agreement, not the date of the VAL231 application, board approval or employee offer. If the grant misses the deadline, a fresh VAL231 application will normally be needed, particularly if the company’s circumstances or share value have changed. The separate 92-day deadline for notifying HMRC of an EMI grant doesn’t extend the valuation window.

For founders, finance directors and management teams, the answer is careful timing and proper records. EMI valuation services for UK SMEs can help keep the valuation, grant process and HMRC requirements aligned. The next step is to confirm which date starts the clock and what action is required if the window has expired.

Key Takeaways

• HMRC’s agreed EMI valuation is normally valid for 90 days from the agreement date, not the VAL231 submission or board approval date.
• If options aren’t granted within 90 days, submit a fresh VAL231 application before relying on the valuation.
• A material change, such as new funding, major contracts or restructuring, can affect validity even within the 90-day period.
• The 92-day EMI notification deadline is separate and doesn’t extend the valuation window.
• A documented EMI valuation report helps support the share value, grant timing and compliance process.

EMI Valuation Validity: What Happens If You Miss the 90-Day Window?

The 90-day period is a deadline for using the HMRC-agreed share value. It isn’t a deadline for discussing the scheme, approving it internally or sending offer letters to employees. The options must be formally granted within the window.

Which Date Starts the 90-Day Countdown?

The countdown starts on the date HMRC agrees the valuation, usually the date shown on the agreement or confirmation letter from HMRC’s Shares and Assets Valuation team.

For example:

• HMRC agrees the valuation on 10 February 2026.
• Treating 10 February as day one, day 90 falls on 10 May 2026.
• The EMI options must be granted by that date, subject to there being no relevant change in the company’s circumstances.

The following dates don’t start the 90-day period:

• The date the VAL231 application was submitted.
• The date the board approved the EMI scheme.
• The date employees received an offer.
• The date the valuation report or option documents were drafted.

This distinction matters. A board resolution on 30 April doesn’t protect a grant completed on 15 May. The legal grant date is the date that matters, not the date the company first intended to issue the options.

The agreed value covers the shares’ Actual Market Value (AMV) and Unrestricted Market Value (UMV). It isn’t an approval of the option’s value as a separate asset. Companies should keep a clear record of:

• The HMRC agreement date.
• The calculated final grant date.
• The date each option was actually granted.
• The signed resolutions, agreements and supporting records.

The HMRC EMI valuation guide provides further context on the valuation window and grant process. In practice, don’t plan to grant options on day 90. Allow time for signatures, board administration and unexpected delays.

What Is the Risk of Granting Options After Day 90?

A late grant may still be legally possible, but the company shouldn’t assume the old HMRC-agreed value still provides protection. HMRC guidance indicates that a fresh VAL231 application is needed when the 90-day period expires before grant.

Using the old value could create several issues:

• The exercise price may be based on an outdated share value.
• The employee could face an income tax charge if the option price is below market value at grant.
• HMRC may question whether the option qualifies for EMI tax advantages.
• Payroll, ERS reporting and company records may need correction.
• The valuation and grant process may receive closer HMRC scrutiny.

A late grant doesn’t automatically fail in every case. The outcome depends on the facts, including any funding round, major contract, restructuring, change in trading performance or other event affecting value.

The sensible approach is to stop and reassess the valuation before granting. Obtain an updated HMRC agreement where required, then document the new grant date and exercise price properly. The separate 92-day deadline for notifying HMRC of an EMI grant starts after grant and doesn’t extend the valuation window.

What Should You Do If Your EMI Valuation Has Expired?

If the 90-day period has expired, stop the grant process before issuing the options. Check the exact HMRC agreement date, calculate the final valid date and review whether the company has changed since the valuation was agreed.

HMRC guidance indicates that a fresh valuation application using form VAL231 is required when options have not been granted within the validity period. Do not rely on the old value simply because the underlying valuation report is recent.

Check Whether the Company Has Changed Since the Original Valuation

An old valuation can become unreliable before the 90 days have ended if a material event affects the company’s value. Review whether the business has had:

• A priced funding round or other investment at a different share price.
• A large contract win, renewal or loss.
• A major change in revenue, gross margin, EBITDA or maintainable earnings.
• An acquisition, disposal or material change in the group structure.
• A debt restructuring, refinancing or significant change in borrowing.
• New share classes, preference rights or changes to existing shareholder rights.
• Changes in share capital, loan capital or the company’s cap table.
• A significant change in the forecasts used in the original valuation.

Ordinary trading movement within the assumptions used for the original valuation may not require an immediate refresh. Material events need a careful review. A funding round, major contract or restructuring can affect the value of the shares even when the formal 90-day period has not ended.

Apply for a Fresh VAL231 and Rebuild the Evidence

A refreshed application should reflect the company’s position at the intended grant date. It shouldn’t simply copy the previous figure and change the date.

The evidence will usually include updated statutory accounts, current management figures, forecasts, the cap table, articles of association, option plan rules, funding documents and evidence of recent share transactions. The purpose is to give HMRC’s Shares and Assets Valuation team a current, reasoned basis for agreeing the share value.

The analysis may consider maintainable earnings, EBITDA multiples, discounted cash flow and comparable transactions. The appropriate method depends on the company’s trading history, prospects, capital structure and the rights attached to each share class.

Speak to Consult EFC before issuing the options, particularly where there has been investment, a major contract, a restructure or a change to share or loan capital.

Can HMRC Extend the 90-Day Period?

HMRC’s published position is that an agreed EMI valuation is valid for 90 days from the agreement date. Some practitioner sources suggest that an extension may sometimes be discussed with the Shares and Assets Valuation team before the period expires.

That isn’t an automatic right or a guaranteed solution. Contacting HMRC after the valuation has gone stale doesn’t revive the old agreement.

Plan on the basis that a fresh VAL231 will be required. Any possible extension should be treated as an exception, not as part of the company’s grant timetable.

How the 90-Day EMI Rule Affects Exercise Price and Tax Relief

The 90-day valuation window matters because it supports the exercise price agreed for the EMI options. That price is central to the commercial reason founders use EMI: employees receive a meaningful interest in future growth without creating an avoidable tax charge at exercise.

HMRC may agree both the Actual Market Value (AMV) and the Unrestricted Market Value (UMV). In simple terms, AMV reflects the shares subject to the relevant restrictions, whilst UMV considers what the shares would be worth without those restrictions. The exercise price, restrictions and option terms must be reviewed together.

Why an Outdated Share Value Can Create an Unexpected Tax Bill

Assume HMRC agrees an EMI share value of £1 per share. The company then wins a major contract and completes a funding round at a valuation that indicates the shares are worth £3. The employee’s option price may still be based on the earlier £1 valuation if the company uses an outdated agreement.

That £2 gap matters. If the exercise price is below the shares’ market value at grant, the discount can affect the employee’s income tax position when the option is exercised. The intended EMI tax relief may not operate as expected, depending on the facts, the option terms and the timing of relevant events.

The issue isn’t limited to tax. Employees may receive options believing the terms are fair, only to discover that an old valuation creates an unexpected liability. That can damage trust at the point when the scheme is meant to reward performance and retention.

A funding round, major contract, material change in forecasts or restructure should trigger a valuation review. The EMI valuation timing guide explains when a fresh share valuation may be needed.

Consult EFC should review the facts before the company grants or amends options. The correct exercise price cannot be selected from a historic report alone. Professional advice is needed before relying on an old value.

Do Not Confuse Valuation Validity with the EMI Notification Deadline

The 90-day valuation window and the 92-day notification deadline are separate compliance steps.

The first runs from HMRC’s agreement date and determines how long the agreed value can normally be used for the grant. The second runs from the actual option grant date and covers notification to HMRC through the Employment Related Securities service.

Missing one deadline doesn’t extend, correct or excuse missing the other. Keep a grant calendar showing:

• The HMRC valuation agreement date.
• The intended grant date and board approval date.
• The signed option documents.
• The 92-day notification deadline.

This record helps prevent a valuation delay from becoming a tax and reporting problem.

Build an EMI Grant Process That Does Not Run Out of Time

The 90-day valuation window should be managed as a project deadline, not treated as spare time after HMRC agrees the share value. Give one person ownership of the process, usually the finance director, company secretary or founder, and keep a dated action log from the VAL231 submission to the HMRC notification.

A Simple EMI Valuation Timeline for Founders and Finance Directors

A practical EMI valuation timeline should follow this sequence:

1. Gather current company information, including accounts, management figures, forecasts, the cap table, share rights, funding papers and recent transactions. The valuation should reflect the company’s position at the intended grant date. The appropriate SME valuation methods will depend on the business, its performance and the rights attached to the shares.
2. Prepare and submit form VAL231, together with the valuation report and supporting calculations, to HMRC’s Shares and Assets Valuation team.
3. Record the date HMRC agrees the valuation. This is the date from which the 90-day period runs.
4. Review the valuation assumptions before granting. Check the forecasts, trading results, funding position, share capital and any new contracts or restructuring.
5. Obtain board approval and finalise the option terms, exercise price and employee eligibility checks.
6. Grant and issue the options within the 90-day window. Target completion by about day 60 where possible, rather than planning around the final permitted date.
7. Complete the separate HMRC notification through the Employment Related Securities service within 92 days of the grant.
8. Save the signed documents and evidence in the company’s EMI file.

A day 60 target leaves time for missing signatures, HMRC questions, corrections, board scheduling or a material-change review. If the company reaches day 75 with key documents outstanding, the valuation should be escalated rather than allowed to drift.

Documents to Keep in the Company’s EMI File

Keep the file accessible to the finance team, company secretary and directors. It should contain:

• The VAL231 application and HMRC agreement letter.
• The valuation report, supporting calculations and key assumptions.
• Board minutes, written resolutions and the final cap table.
• Signed option agreements and plan documents.
• Employee eligibility checks and relevant employment records.
• Forecasts, management accounts and statutory accounts.
• Funding papers, recent share transactions and details of material events.
• HMRC notification evidence, including the submission confirmation.

A complete file shows how the exercise price was set and which information was available at the time. It also supports the company during due diligence, fundraising, a sale or an HMRC question. A valuation is easier to defend when the evidence is organised, dated and consistent with the grant documents.

Frequently Asked Questions

The 90-day rule raises practical questions because an EMI valuation involves more than the valuation figure alone. These are the points founders and finance directors should confirm before completing a delayed grant.

Does an employee offer count as an EMI grant?

No. An offer letter, informal agreement or board approval doesn’t normally create the option. The grant must be formally made under the EMI plan and supported by completed option documentation within the valid valuation period.

If the employee has accepted an offer but the formal grant is delayed, check the timing again before signing. The 90 day option grant window relates to the actual grant, not the earlier discussion.

Can the company grant options while waiting for a fresh VAL231 agreement?

The company should not rely on the expired valuation whilst waiting for HMRC’s response. Granting first and seeking agreement later can leave the exercise price unsupported and create questions over the intended EMI treatment.

The safer process is to prepare the updated information, submit the fresh VAL231 application and wait for the new agreement before making the grant. Consult EFC can review the proposed grant timetable and supporting valuation evidence.

What happens if the company has signed the option documents after day 90?

Signing documents after the original 90-day period doesn’t revive the expired HMRC agreement. The company should review whether the documents need to be withdrawn, replaced or amended after a fresh valuation has been agreed.

The correct treatment depends on the documents already signed, the intended grant date and whether any option has been legally granted. Obtain advice before backdating or altering paperwork.

Does the employee need to be told about the valuation delay?

The company should explain any material change to the proposed exercise price or grant terms before asking the employee to accept replacement documents. Employees need clear information about the number of shares, exercise price, vesting conditions and tax treatment.

A short delay is easier to manage when communication is direct. Leaving employees with outdated paperwork can create confusion and weaken confidence in the scheme.

When must a current EMI grant be reported to HMRC?

For EMI options granted on or after 6 April 2024, the notification deadline is generally 6 July following the end of the tax year in which the grant was made. The previous 92-day rule applies to earlier grants, so don’t carry it forward automatically.

The valuation must still be valid on the grant date. Reporting the grant on time doesn’t correct an expired valuation or an unsupported exercise price.

Can a later valuation produce a lower exercise price?

Yes, a fresh valuation may produce a different AMV or UMV. The result depends on the company’s financial performance, share rights, funding position and any material events since the first application.

The company must use the newly agreed figure and update the option documents accordingly. A lower value isn’t guaranteed, and copying the previous valuation without reassessing the evidence isn’t sufficient.

Conclusion

An HMRC-agreed EMI valuation isn’t permanent. If the options aren’t granted within 90 days of HMRC’s agreement, the company shouldn’t rely on the old figure without review. A fresh VAL231 will usually be needed before the options are issued. A material change, such as new investment, a major contract or a restructure, can make the valuation stale even sooner.

The practical response is straightforward. Check the HMRC agreement date, calculate the final grant date and pause any late grant. Gather updated accounts, management figures, forecasts, cap table details and information on any material changes. A current EMI valuation assessment can then support the revised application and proposed exercise price.

Speak with Consult EFC before issuing the options. A properly timed grant, supported by current evidence and complete records, gives founders and finance directors a clearer compliance position. The 90-day window is manageable when it is treated as a firm project deadline, not an administrative detail.

Kishen Patel, BFP ACA Founder, Consult EFC · ICAEW Chartered Accountant

Over 12 years across Big Four audit, Investment Banking and corporate advisory. Kishen works with UK SMEs on valuations, exit planning, fundraising and financial strategy. ICAEW regulated. Big Four trained. Based in London.