I am helping a friend to complete his self assessment form.
In 2017-18 he traded for two months (Feb and March 18). They have a car on a PCP finance arrangement which has a balloon payment of £4k.
I need some advice on how to proceed with treating the car.
I know I can claim AIA on the car in the first year. I take it this would be restricted as the car was only in use for two months of the year?
Thereafter I can claim 18% a year of the cars value in capital allowances. How does the balloon payment affect the carrying value I need to use? Can I use the cost including the balloon payment of £4k or use the cost less the £4k balloon payment (to avoid a balancing charge at the end of the lease period)?
Thanks in advance for your help.