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I’m a bit confused by the bookkeeping for the myriad of car financing that is out there. I’ve done the typical google search and there are such differing opinions on how to process a PCP agreement, some say treat as hire purchase, with a loan account, others as a lease. These two seem to have very different consequences on the amount that can be offset against tax as an expense. If there is no intention of making the final balloon payment and you were just using the PCP effectively to hire the car for a set number of years before returning it can you then put the full monthly payment as an expense in the P&L or can you only ever claim the interest in each monthly payment as an expense? If you can only claim the interest what would you do when you returned the car, would that count as selling your asset with the entire NBV as a loss?
Any thoughts to clear my confusion gratefully received
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