An End to the Extended EMI Valuation Period

When Enterprise Management Incentive (EMI) options are ready to be granted, it is possible to contact HMRC and agree on an appropriate valuation. The value agreed with HMRC remains valid for a period of time to allow companies to grant the options. It was recognised that coronavirus (COVID-19) could lead to delays in granting EMI options, so from 1 March 2020, the agreement period was extended from 90 days to 120 days.

HMRC had extended the period, during the COVID-19 pandemic, for which an agreed valuation of shares could be used for EMI options (assuming no material changes occurred during the meantime) from 90 days to 120 days. However, on 14 July 2022, HMRC announced that from 1 December 2022 onwards, the period was reverting back to 90 days. Therefore, any EMI valuation agreement letters issued on or after 1 December 2022 will be valid for 90 days only.

When HMRC agree on a valuation for EMI purposes, they state that it is agreed on the basis that there are no changes prior to the granting of the options that could affect the accepted value. Such changes may include, but are not limited to:

  • Any change (completed or contemplated) in the share or loan capital of the company;
  • Any arm's length transactions (completed or contemplated) involving shares of the company;
  • Negotiations or preparations for a flotation or takeover;
  • The publication by the company of any new financial information, for example, the annual accounts or interim results or announcements.

Lawrence Grant LLP (LG) are experienced at completing and agreeing on valuations with HMRC for EMI purposes, and can advise on the design and implementation of EMI Option Schemes.

If you would like assistance with granting EMI options to your employees please reach out to Lawrence Grant as we can assist with all of your needs.

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