Open-market value separates the two periods
When stock is appropriated, its open-market value at that date is treated as trade income for the corresponding YA; the resulting revenue gain or loss follows the deduction rules. For an asset converted into stock, market value at conversion becomes its stock cost when subsequently sold, together with later allowable costs. The conversion-stage capital gain or loss is not treated as a taxable revenue profit or deductible trading loss.
Capital allowances and evidence
Qualifying plant or machinery may involve capital allowances or balancing adjustments. For previously allowed machinery converted into stock, the guide compares market value with tax written-down value; a balancing charge is capped at earlier capital allowances. Document the actual change in use, date and valuation. Merely looking for a buyer for an unchanged long-term investment asset does not automatically prove conversion to trading stock.
Official source
A concise, independent Apex Gateway guide based on the official English source, not a reproduction of the complete document. Consult the original for full conditions, exceptions and subsequent updates.
Read the official PDF ↗