I bought a car on PCP about 2 years ago and started using it in my business (sole trader) about 6 months ago.
I put down a deposit of £2500 (which was the part ex value of the car I traded in) and pay £255 per month (on a 3 year contract) on the PCP which includes servicing.
How should I put this through my books and what happens with tax?
Do I put the car in at the value it was 6 months ago when it came into the business or the value when I originally started the contract and then claim capital allowances on that amount?
If I decide to just hand it back when the contract ends are there any tax implications?
Or if I decide to pay the balloon payment of £5000 after 3 years how does that affect the tax?
Thank you
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Professional Advice
You should probably raise this with your accountant. They are best placed to give you this advice.
If you are trying to prepare your own accounts and do not understand how this works may I suggest that you hire an accountant to do it for you.