What counts as a restriction
Shares issued to employees in a private company almost always come with conditions. Typical examples are:
- Leaver provisions that require an employee to sell their shares back, sometimes at less than market value, if they leave.
- Restrictions on transferring the shares.
- Drag-along provisions that can force a sale.
A buyer would pay less for a share carrying conditions like these than for an identical share without them. AMV reflects that reduction. UMV does not.
What each value is used for
| AMV | UMV | |
|---|---|---|
| Restrictions | Taken into account | Ignored |
| Relative size | Equal to or lower than UMV | Equal to or higher than AMV |
| Used for | Benchmark for the exercise price | Testing the individual and company EMI limits |
| Why it matters | An exercise price at or above AMV generally means no income tax on exercise | Options above the limits do not qualify for EMI treatment |
A worked example
Suppose HMRC agrees a UMV of £1.00 per share and an AMV of £0.80 per share, and the company wants to grant an employee options over 100,000 shares.
- Limit test. 100,000 shares at the £1.00 UMV is £100,000, which is within the £250,000 individual limit.
- Exercise price. Set at £0.80, matching AMV. The employee can later exercise without an income tax charge, provided the other EMI conditions are met.
- If the price were £0.50. The option could still be an EMI option, but the £0.30 discount per share would be subject to income tax on exercise.
The figures are illustrative. The gap between AMV and UMV depends on how much the specific restrictions in your articles and option agreement affect value.
The limits UMV is tested against
- Per employee: £250,000 of shares under unexercised EMI options.
- Per company: £6 million of shares under unexercised EMI options, for grants from 6 April 2026 (previously £3 million).
Agreeing both with HMRC
Form VAL231 asks for both values where the shares carry restrictions. HMRC's Shares and Assets Valuation team reviews the submission and, once agreed, the valuation is valid for 90 days. Granting within that window, at the agreed AMV or above, gives you certainty over the tax treatment.
How this compares with the US
A US 409A valuation produces a single fair market value and has no AMV and UMV split. If you grant in both countries, see EMI vs 409A valuations. For help preparing an EMI valuation, see our UK EMI valuation service.
Frequently asked questions
What is the difference between AMV and UMV?
Actual Market Value is what a share is worth taking account of the restrictions attached to it. Unrestricted Market Value is what the same share would be worth if those restrictions did not exist. UMV is therefore equal to or higher than AMV.
Which value sets the EMI exercise price?
AMV. If the exercise price is at least the AMV at the date of grant, there is generally no income tax when the option is exercised.
Which value is used for the £250,000 limit?
UMV. Both the £250,000 individual limit and the company-wide limit on unexercised EMI options are measured using UMV at the date of grant.
Can AMV and UMV be the same?
Yes. If the shares carry no restrictions that affect their value, the two figures are equal.
Can we grant EMI options below AMV?
Yes, EMI options can be granted at a discount, but the discount is then subject to income tax when the option is exercised.
This page is general information, not tax or legal advice. It reflects US and UK rules as we understand them in October 2026; confirm how they apply to your company with your advisers.