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Hi, could you kindly explain the difference between premium and gross premium? I am using Beckers for my revision and they are calculating the premium using [1- {(50-n)/51}]. I don’t understand the logic behind this because the question doesn’t mention the lease premium to be a gross amount.
See OT course notes page 23, Chapter 3 section 5 with example 4, and / or listen to the relevant lecture with further example. Also then look at the position for the lessee who pays the premium on a property used in a trade – see page 26, Chapter 4 section 2.2 (j) again preferably with the relevant lecture on the adjustment of trading profit.
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