TAX question, stock/borrowing

[flashgordon12345]

HI,
Lets say I have borrowed £50,000 from my mum,
I have bought stock with that money.

When it comes to tax return, does that mean I have to pay tax on the stock I own?

It doesn't make sense, that mean you are in debt of £50,000 plus you pay tax on the stock.

Or is it £50,000 debt + expenses - (all stock + profits) = taxable profits.

 

[Philip Hoyle]

You claim tax relief on the stock sold in each year you sell it. You don't get taxed on stock. So, if for example you start with £50k and sell £10k of it in year 1 for £20k, you pay tax on £10k profit, i.e. £20k sales less £10k stock sold. Or more strictly:-

Sales £20k

Cost of sales
Op stock £50k
Clos stock £40k
Cost of goods sold £10k

Gross profit £10k.