Capital Gains Tax and a new Business

Sharkotron

I want to start a business from home repairing faulty electronics.

I will be buying second hand goods and selling for a profit. Since the VAT has already been paid on the goods, is my `profit` subject to CGT only?

Elaine_Wilson

VAT is irrelevant here.

If you are buying goods for resale then then any profit you make will be subject to income tax, not CGT.

Sharkotron

If I'm buying second hand with no receipts, how can I prove to the tax man how much I paid for them? I'll need this when calculating profit on my self assessment form won't I?

TM1976

You don't need to keep receipts to prove how much you paid for your goods you just need a record, however having supporting documents may help if you have a tax inspection. Keep a cash book of what you have paid.

If you aren't VAT registered you can't claim back the VAT, I suspect you'll be buying from individuals who aren't VAT registered either. If you are selling more than £70k a year you may need to register for VAT.

Your profits won't be subject to CGT because this is for profit on the sale of assets such as shares/property etc. Your income will be the profits of a trade that are subject to income tax.