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Transferring Stock from Sole Trader to Ltd Company

MooreAccountsMooreAccounts MAAT, AAT Licensed Accountant Posts: 14
Hi all,

I have a client who is incorporating for the first time. He has a fair amount of stock and wants to transfer it into the company. My understanding for the company side is that it will be:
DR Stock

But how does it affect his sole trader self assessment? The trade is manufacturing, so he bought items for use in production rather than goods for immediate resale.

Thanks in advance,


  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,432
    The stock is deemed to have been sold at market value to the company (connected persons). If higher than the cost of the stock this will result in more taxable profits on cessation.
    Unless they make a joint election under s 178 ITTOIA for the stock to be treated as higher of the cost or consideration received (probably nil), in which case the profit on the stock will be nil for the sole trader and the value in the company's accounts is the original cost of the stock.
  • MooreAccountsMooreAccounts MAAT, AAT Licensed Accountant Posts: 14
    Thanks MarieNoelle!
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