HMRC Shares and Assets Valuation (SAV): Process, VAL231 - What to Expect

Quick Answer

HMRC Shares and Assets Valuation (SAV) is the specialist HMRC team responsible for reviewing the value of unquoted shares for tax purposes, including EMI, inheritance tax, capital gains tax and other share-related transactions.

Key Takeaways

SAV is HMRC's centralised, technical unit that reviews valuations of unquoted shares and other assets for UK tax purposes.

You meet SAV most often through VAL231 (advance agreement of EMI option values), post-transaction valuation rulings, share-for-share exchanges and employment-related securities (ERS) events.

SAV does not set the value. It reviews the methodology, the comparables, the discounts and the restrictions analysis, then agrees, counter-proposes or rejects.

Typical turnaround is four to six weeks, sometimes longer. An EMI valuation agreed through VAL231 is valid for 90 days, provided no material event changes the company's value.

The strongest defence against pushback is a contemporaneous, well-evidenced valuation report - clear methodology, justified comparables and a transparent UMV-to-AMV bridge.

What is HMRC Shares and Assets Valuation?

HMRC Shares and Assets Valuation (SAV) is the specialist HMRC unit that reviews valuations of unquoted shares, intangible assets, goodwill and certain other interests for UK tax purposes. It sits within HMRC's wider compliance function and is the team UK companies and their advisors interact with whenever a tax event depends on the open-market value of private company shares.

SAV is staffed by valuation specialists rather than general tax officers. Its role is technical: to assess whether the valuation submitted is reasonable, properly evidenced and consistent with how a hypothetical willing buyer and willing seller would price the shares on the open market.

SAV does not impose a value. It either agrees the valuation as submitted, comes back with a counter-proposal, or rejects the submission and asks for further work.

When is SAV used?

Companies, shareholders and their advisors interact with SAV in a small number of recurring scenarios.

EMI option grants (VAL231)

The most common touchpoint. Before granting Enterprise Management Incentive options, a company can ask SAV to agree both the Unrestricted Market Value (UMV) and the Actual Market Value (AMV) of the shares under option, using form VAL231. Agreement gives the company and its option-holders certainty on the exercise price and the tax treatment.

Post-transaction valuation rulings

Where a transaction has completed and certainty over the tax consequences is required - capital gains tax, share buybacks, corporate reorganisations - the company or its tax adviser can apply to SAV for a post-transaction valuation ruling (PTVR).

Share-for-share exchanges and reorganisations

Schemes of arrangement, group reorganisations and demergers can require evidenced share values for stamp duty, CGT and corporation tax purposes. SAV may be involved either through PTVR or as part of a clearance application.

Employment-related securities (ERS)

Acquisitions of shares by employees or directors - including Section 431 elections and growth share arrangements - trigger ERS reporting and depend on a defensible share value at the date of acquisition.

Inheritance tax and probate

Where unquoted shares pass on death or by lifetime gift, SAV reviews the value declared on the IHT return for inheritance tax and capital gains tax purposes.

How does it work?

The mechanics are similar across the different routes, with VAL231 as the clearest example.

1. Prepare the valuation

The valuation report is the heart of the submission. SAV expects to see:

A clear basis of value, tied to the relevant tax provision.

A methodology section - earnings multiples, DCF, NAV - explained and justified.

Comparables, both listed peers and (where available) recent UK private transactions.

An explicit analysis of discounts for lack of control and lack of marketability, supported by market evidence.

For EMI, a clause-by-clause review of restrictions in the articles and shareholders' agreement, and a clear bridge from UMV to AMV.

2. Submit to SAV

For VAL231, the form and valuation report are sent to SAV by email. Other applications (PTVR, IHT, clearances) follow their own forms but the supporting valuation pack is broadly the same.

3. SAV review

A SAV officer reviews the file. They may:

Agree the valuation as submitted.

Counter-propose different figures, usually with a short explanation.

Reject and ask for further work or a different methodology.

4. Response and use

For VAL231, the agreed UMV and AMV can then be used to set the exercise price for any EMI options granted within the validity window. For PTVR and other rulings, the agreement is tied to the specific transaction.

Timeline

There is no statutory deadline for SAV to respond. Typical experience:

VAL231: four to six weeks from submission to first response. Complex cases or busy periods can stretch this to eight to twelve weeks.

PTVR: several weeks to several months, depending on complexity and HMRC workload.

IHT and clearances: variable, often handled alongside the wider HMRC process.

EMI valuations agreed via VAL231 are valid for 90 days from the date of HMRC's response, provided no material event - a funding round, a major contract win or loss, an acquisition - has changed the company's value in the meantime.

If the 90-day window lapses before grant, the company either refreshes the valuation and asks SAV to agree the new figures, or proceeds without HMRC agreement and accepts the higher risk of later challenge.

HMRC perspective

It helps to think about how SAV reads a file.

SAV starts from the statutory test: the price the shares would fetch on the open market between a willing buyer and willing seller, both informed and acting at arm's length.

The hypothetical purchaser has access only to information reasonably available at the valuation date. Post-event hindsight cannot be used.

SAV is sceptical of generous discounts that are asserted rather than evidenced. Discounts for lack of control and lack of marketability should be calibrated to UK and US restricted-stock evidence and to the specific facts of the company.

Recent transactions in the company's own shares - a funding round, a buyback, a third-party offer - are powerful evidence. A valuation that ignores or under-weights them is likely to be challenged.

SAV expects internal consistency: the methodology, the comparables, the discounts and the resulting UMV and AMV should all hang together.

Common mistakes

Most pushback from SAV traces back to one of a small number of issues.

Thin methodology. A two-line justification for a multiple, with no peer set or sense-check.

2. Stale or incomplete financials. Last filed accounts only, with no recent management accounts.

3. Ignored funding round. A recent priced equity round not reflected, or unconvincingly discounted away.

4. Generic discounts. A "standard" 50% combined discount for minority and marketability, with no evidence base.

5. Missing restrictions analysis. For EMI, no clause-by-clause walkthrough of the articles and shareholders' agreement, and no clear UMV-to-AMV bridge.

6. Form and report inconsistencies. The figures on VAL231 do not match the figures in the report.

Each of these is fixable before submission - and far cheaper to fix in advance than to argue about with SAV.

Example

A SaaS business with ARR of around £2.5m and high gross margins wants to grant EMI options to its leadership team and engineers. The board agrees a target exercise price and asks for VAL231 agreement before grant.

The valuation report sets out an earnings multiple methodology, with a peer set of UK listed and recently traded private SaaS comparables, adjusted for size, growth and profitability. The recent SAFE round eighteen months earlier is reflected as supporting evidence. UMV is set at £4.20 per ordinary share. The articles include drag, tag, pre-emption and bad-leaver provisions; a 15% combined restriction discount takes AMV to £3.57 per share.

The submission goes to SAV with the valuation report, the cap table, the articles, the shareholders' agreement and the latest management accounts. SAV agrees the values five weeks later. The company grants options at £3.57 per share within the 90-day window.

FAQ

Is SAV the same as HMRC?

SAV is a specialist team within HMRC. Its agreements are recognised across HMRC's wider operations, so a valuation agreed via VAL231 is treated as agreed for EMI purposes by the rest of HMRC.

Does SAV set the value?

No. SAV reviews the value the company has put forward and either agrees it, counter-proposes a different figure, or rejects the submission and asks for further work.

Do I have to use SAV for an EMI valuation?

No. EMI options can be granted without VAL231 agreement, but the company and the option-holders then carry the risk that HMRC later challenges the exercise price. For most schemes, the certainty of VAL231 is worth the time and cost.

How long is an SAV-agreed EMI valuation valid?

90 days from the date of HMRC's response, provided no material event changes the company's value in the meantime.

Can the same valuation be used for multiple tax purposes?

Sometimes, but the basis of value must match the tax purpose. EMI uses UMV and AMV; CGT and IHT use open-market value under their own statutory tests; ERS uses UMV. The same underlying analysis often supports each, but the report should be tailored to the purpose.

What happens if SAV challenges the valuation later?

A contemporaneous, well-evidenced valuation report is the strongest defence. Where SAV raises queries after the event, the company or its tax adviser responds with the supporting analysis, usually with input from the original valuer.

Related concepts

Unrestricted Market Value (UMV) - the value of the shares ignoring restrictions, used for the EMI £250k individual / £3m company limits.

Actual Market Value (AMV) - the value reflecting the restrictions in the articles and shareholders' agreement, used to set the EMI exercise price.

Discounts for lack of control and lack of marketability - applied where appropriate, calibrated to market evidence.

Minority interest - a non-controlling holding, typically warranting a discount on a pro-rata enterprise value.

Restrictions - drag, tag, pre-emption, bad-leaver and similar provisions that affect what a buyer would pay.

Section 431 election - made within 14 days of acquiring restricted shares, to be taxed on UMV at acquisition and crystallise the position.

Growth shares - a separate class issued at a hurdle, often with a low initial value and a clean tax position when combined with Section 431.

VAL231: Step-by-Step Guide to HMRC's EMI Valuation Form

EMI Share Valuations: Complete UK Guide 2025

HMRC's Updated Guidance on Share Valuations

Need an independent valuation?

Optival prepares HMRC-ready valuation reports for UK SMEs, with the methodology, comparables and restrictions analysis already in the format SAV expects. Our EMI valuation service is a fixed-fee £1,950 engagement that includes the full report, the VAL231 submission pack and liaison with SAV through to agreement. For other tax events, our HMRC tax valuations cover post-transaction rulings, ERS, Section 431 and reorganisations.

Optival is advisory only. We are not a regulated tax agent and we do not hold HMRC agreements on behalf of clients; submissions to SAV are made in the company's name. What we do is make sure the file you hand to SAV is the one that gets agreed first time.

If you have a share scheme, a transaction or an HMRC submission on the horizon, get in touch for a confidential conversation. Full pricing is on the pricing page.