The definition of capital payment is in TCGA92/S97(1) and is very wide. It means:

Any payment other than a payment:

chargeable to Income Tax if it is received by a UK resident

received as income if it is received by a non-resident

under an arm's length transaction.

Exclusion for Income Tax

The exclusion for amounts chargeable to Income Tax includes both actual income receipts and amounts deemed to be income for tax purposes. For example:

Trust income payable to a life tenant including distributions of accumulated income.

Distributions of income treated as income of the settlor when it arises, ITTOIA05/S624(1).

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