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Lease premium write offs

Lease premium write offs

Hi everyone,

Do you know if I should treat "lease premium received for sub-let" in the following case as "lease premium write offs"?

ABC Ltd paid an annual rent for the year to 31 March 2012 of £8,800 for Windermere property, but did not pay a premium when the lease was acquired. It has been sub-let during 2012. Windermere property, a Leasehold office building, has been sub-let from 1 April 2011 to a new tenant who has paid a premium of 28,000 for the grant of an 8-year lease and pays ABC Ltd annual rent of £6,000 which was payable in advance.

I would appreciate very much if you can help me with this!




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By blok
21st Aug 2012 17:34


can you rephrase the question? I think there is some misplaced commas and full stops in there and some full stops missing.

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to tax novice
21st Aug 2012 18:00

Thank your for your comment.

Sorry let me make the question simple. Assume that a company receives lease premium of £18,000 for subletting to a new tenant for the grant of an 8-year lease from 1April 2012. In this case, should I add £2,520 [ £18,000 X 2% X (8 - 1) ] to PROFIT BEFORE TAX, in order to calculate Taxable trade profit/loss for the year ended 31 March 2012?

It is because, according to our uni's lecture slides, we need to add "Lease premium write offs" to PROFIT BEFORE TAX, in order to compute taxable trade profit/loss.


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