Sole Trader to Ltd Company UK: Transfer Guide 2026

What this document is

A Business Transfer Agreement, often shortened to BTA, is the contract that formally moves a going concern from one owner to another. In the sole trader to limited company context, you are effectively selling your business to the new company you have just incorporated, even though in practical terms you probably own all or most of the shares in that company.

The agreement names the seller (you, in your personal capacity), the buyer (the new limited company), and lists what is being transferred. That usually includes tangible items such as equipment, stock, and vehicles, along with intangible items like goodwill, the trading name, customer lists, intellectual property, and the benefit of existing contracts.

It can also deal with staff transferring under TUPE, ongoing liabilities, and how the purchase price is paid, which is often left outstanding on a director's loan account rather than settled in cash. Without a proper BTA, HMRC, lenders, and future buyers of your company may struggle to see a clean paper trail of what the company actually owns.

How to use this document

1. Decide why you are incorporating. Before drafting anything, be clear on the reasons for the change. Limited liability, corporation tax treatment, credibility with larger clients, and plans to take on investors are all common drivers. Your reasoning will shape decisions about share structure, director appointments, and the timing of the transfer, so it is worth thinking this through properly rather than rushing into formation.
2. Incorporate the new limited company. Register the company at Companies House, either directly or through a formation agent. You will choose a name, appoint directors, issue shares, and set up a registered office. Check that the company name is available and does not clash with existing trade marks. Once incorporated, the company exists as a separate legal person and is ready to receive the business assets from you.
3. List and value what is being transferred. Prepare a full inventory of assets moving across, including physical items, stock, intellectual property, goodwill, domain names, and any ongoing contracts. Getting realistic valuations matters for tax purposes and for the company's opening balance sheet. Goodwill valuations in particular have tax implications following rule changes in recent years, so take care here.
4. Draft and sign the Business Transfer Agreement. The BTA records the sale from you to the new company, with the assets, liabilities, consideration, and effective date all set out in writing. Both parties sign, which in practice often means you signing in two capacities, once personally and once as a director of the company. Keep the signed agreement with the company's statutory records.
5. Notify relevant parties and update registrations. Tell HMRC about the change, cancel or update your self-employment registration, register the company for corporation tax, PAYE if you have staff, and VAT if applicable. Notify your bank, insurers, landlords, suppliers, customers, and anyone you have contracts with. Existing contracts may need formal assignment or novation rather than just a letter.

Common questions