Okay-this is just my idea of a capsule (I have recently done this and it makes life easier). Firstly pick four colours that work well together for neutrals and a brighter one for some accessories. For me my wardrobe revolves around black,white,grey,tan and red.
This is what I worked out I needed
Shoes-
Tan leather thong sandals
Black biker boots
Taupe suede multi buckle boots
Nude ballet pumps
Bag
Slouchy taupe/neutral hobo bag.
Trousers
Wide leg black
Tops
Boatneck 3/4 sleeve
Slouchier linen t-shirts
Dresses
Black tube maxi for layering
Empire line maxi
Skirts
Long linen maxi in white
Maxi in black jersey
Cardigans
White,red and black lighter ones for layering
Vest/cami
In all colours
Jumpers
Longer thigh length v- neck slouchy ones
Shorter ones for going over dress.(cashmere)
Cropped denim jacket
Silver cuffs and bangles.
I don't wear jeans but insert cut that works:)
I think if you build a wardrobe around plain basics they last you longer and you get sick of them far less.
I already had red ballet pumps, Bretons, red wedges,black leather slouchy bag.
In terms of budget -it is doable. Most of my stuff I picked up when Boden (wide neck tops) had an offer/sent a voucher or I went through Next Clearance and picked it up half price (boots £35 each).
You have to go on there early in the morning as that is when all their stock is updated and is the best chance of picking up some bargains.
The bag is in their main section and is very lovely and about £45. It is big and has a leather bottom -can you tell I'm pleased with it?
I love Autograph cashmere as it lasts and washes well. I have picked mine up new on eBay for a quarter of the normal price. On Next Clearance they have a neutral and navy one ( look under signature) for £35. Not my colours but a bargain for those who suit them.
Next cardigans are good for summer( £18?)It's the basic crew that comes in an array of colours and the vests are good too.
I simplified my make-up too. Now I suit a true red lip and the best one I have found is No7 stay perfect -love red. It sticks around and doesn't feather. I like Revlon Colorstay foundation for oily skin, MAC Brule eyeshadow, Avon glimmersticks eyeliner and No7 mascara. For red toes no7 devil red is lovely.
Hope some of this helps!