Lease Premium Paid By Companies

A company paid lease premium of £50,000, lease duration is 25 years. I would like to know that whether we should treat the lease as per below mentioned formula or not. P x (50-Y)/50 =50,000 * (50-24)/50= £26,000 Revenue Expenditure 50,000-26,000=24,000 Capital Expenditure 26000 we will claim as expense in 25 years which is = £1,040 per year (26000/25 Year) and 24000 will be capitalised Please tell me whether it is correct or not.

Hi,

Leases of less than 50 years are considered to be short leases. Part of any premium you may receive for the grant of a short lease is chargeable to Income Tax.  

Example 2 in the link below shows how to calculate the Capital Gains Tax and the Income Tax.

HS292 Capital Gains Tax, land and leases (2022)

Thank you.