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Hello,
I am trying the examples as told from the lecture and got really confused, please help..for the premium relief for leasee, is it the “total property income assessed” or just the “premium assessed” that’s divided by lease year?
I used the property income from Ex4 and got GBP2048, but the answer at the back used the premium amount only to get GBP1860Thank you
The question asks you to compute the relief available to the lessee in respect of the premium payment which is shown in the model answer as an annual deduction against trading profit.
In addition to this when computing the adjusted trading profit of Richard for a full year, the annual rental payable of 5,000 pa would also of course be deductible.
If in this example you had been told that Richard prepares his accounts to 31 December in each year and the question asked you to compute the total trading profit deductions in relation to the shop for the year ended 31 December 2016, then you would compute 6/12 of the rental payable (6/12 x 5,000) and 6/12 of the annual trading profit deduction in respect of the premium (6/12 x 1860) (it is only 6 months worth of the annual figures as the lease was only granted at 30 June 2016)
Be careful when answering a MCQ to answer the precise question being asked!
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