diff --git a/src/backend/InvenTree/build/models.py b/src/backend/InvenTree/build/models.py
index 9b13dbf1ed..22b98d031d 100644
--- a/src/backend/InvenTree/build/models.py
+++ b/src/backend/InvenTree/build/models.py
@@ -1606,12 +1606,19 @@ class BuildItem(InvenTree.models.InvenTreeMetadataModel):
                     'quantity': _(f'Allocated quantity ({q}) must not exceed available stock quantity ({a})')
                 })
 
-            # Allocated quantity cannot cause the stock item to be over-allocated
+            # Ensure that we do not 'over allocate' a stock item
             available = decimal.Decimal(self.stock_item.quantity)
-            allocated = decimal.Decimal(self.stock_item.allocation_count())
             quantity = decimal.Decimal(self.quantity)
+            build_allocation_count = decimal.Decimal(self.stock_item.build_allocation_count(
+                exclude_allocations={'pk': self.pk}
+            ))
+            sales_allocation_count = decimal.Decimal(self.stock_item.sales_order_allocation_count())
 
-            if available - allocated + quantity < quantity:
+            total_allocation = (
+                build_allocation_count + sales_allocation_count + quantity
+            )
+
+            if total_allocation > available:
                 raise ValidationError({
                     'quantity': _('Stock item is over-allocated')
                 })
diff --git a/src/backend/InvenTree/build/test_api.py b/src/backend/InvenTree/build/test_api.py
index 83af0a7f1d..f3feee051a 100644
--- a/src/backend/InvenTree/build/test_api.py
+++ b/src/backend/InvenTree/build/test_api.py
@@ -993,6 +993,65 @@ class BuildAllocationTest(BuildAPITest):
             expected_code=201,
         )
 
+class BuildItemTest(BuildAPITest):
+    """Unit tests for build items.
+
+    For this test, we will be using Build ID=1;
+
+    - This points to Part 100 (see fixture data in part.yaml)
+    - This Part already has a BOM with 4 items (see fixture data in bom.yaml)
+    - There are no BomItem objects yet created for this build
+    """
+
+    def setUp(self):
+        """Basic operation as part of test suite setup"""
+        super().setUp()
+
+        self.assignRole('build.add')
+        self.assignRole('build.change')
+
+        self.build = Build.objects.get(pk=1)
+
+        # Regenerate BuildLine objects
+        self.build.create_build_line_items()
+
+        # Record number of build items which exist at the start of each test
+        self.n = BuildItem.objects.count()
+
+    def test_update_overallocated(self):
+        """Test update of overallocated stock items."""
+
+        si = StockItem.objects.get(pk=2)
+
+        # Find line item
+        line = self.build.build_lines.all().filter(bom_item__sub_part=si.part).first()
+
+        # Set initial stock item quantity
+        si.quantity = 100
+        si.save()
+
+        # Create build item
+        bi = BuildItem(
+            build_line=line,
+            stock_item=si,
+            quantity=100
+        )
+        bi.save()
+
+        # Reduce stock item quantity
+        si.quantity = 50
+        si.save()
+
+        # Reduce build item quantity
+        url = reverse('api-build-item-detail', kwargs={'pk': bi.pk})
+
+        self.patch(
+            url,
+            {
+                "quantity": 50,
+            },
+            expected_code=200,
+        )
 
 class BuildOverallocationTest(BuildAPITest):
     """Unit tests for over allocation of stock items against a build order.
diff --git a/src/backend/InvenTree/stock/models.py b/src/backend/InvenTree/stock/models.py
index efe335fd25..b4eb7e523c 100644
--- a/src/backend/InvenTree/stock/models.py
+++ b/src/backend/InvenTree/stock/models.py
@@ -1190,9 +1190,17 @@ class StockItem(
 
         return self.sales_order_allocations.count() > 0
 
-    def build_allocation_count(self):
-        """Return the total quantity allocated to builds."""
-        query = self.allocations.aggregate(q=Coalesce(Sum('quantity'), Decimal(0)))
+    def build_allocation_count(self, **kwargs):
+        """Return the total quantity allocated to builds, with optional filters."""
+        query = self.allocations.all()
+
+        if filter_allocations := kwargs.get('filter_allocations'):
+            query = query.filter(**filter_allocations)
+
+        if exclude_allocations := kwargs.get('exclude_allocations'):
+            query = query.exclude(**exclude_allocations)
+
+        query = query.aggregate(q=Coalesce(Sum('quantity'), Decimal(0)))
 
         total = query['q']