Annual payments must be of an income nature rather than of a capital nature and the difference between the two has been discussed at length at ¶106-000. The distinction is sometimes a fine one as is illustrated by the following examples.

Example 1

Jack agrees to pay Leroy a lump sum of £20,000 for an antique clock. The sum is to be paid in four yearly instalments of £5,000. Each instalment is capital in Leroy’s hands (unless Leroy is a dealer: see ¶132-000; see also TCGA 1992, s. 37(3): ¶518-600).

Example 2

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