Income Tax (Trading and Other Income) Act 2005 section 181

Meaning of "sale" and related expressions

Section 181 clarifies how the term "sale" and related expressions used in the stock valuation rules should be interpreted when trading stock is transferred for valuable consideration rather than sold outright.

• For the purposes of the stock valuation rules in sections 175 to 178, a "sale" includes any transfer of stock made in exchange for valuable consideration, not just a straightforward sale transaction.
• Where a transfer occurs rather than a sale, the "amount realised on the sale" means the value of whatever consideration was given in exchange for the transfer.
• The "buyer" in such a transfer is the person who receives the stock, and the "seller" is the person who transfers it.
• The one exception is section 178(5), where the word "sale" retains its ordinary, narrower meaning and does not extend to other types of transfer.