Capital payments

A capital payment is usually a lump sum asset payment which may be received periodically or as a one-off payment.

Examples of capital payments could include:

• getting a house
• a property
• a gift
• donations made through crowdfunding website e.g. Givealittle and PledgeMe
• a lottery win
• an inheritance or
• proceeds from the sale of a house
• money to pay for braces for a child instead of paying Child Support

Generally the definition of income does not include capital payments.

If the capital payment received is paid as a one-off lump sum payment, it is not considered as income. However, where capital payments are received periodically and are made for and used for an income-related purpose they will be treated as income.

If the payment received is a capital payment then you need to consider what the client may do with this payment. If they choose to invest the payment then the interest received from the investment would be treated as income. For more information see: Income from assets

Each case should be considered on its own merits, where you are having difficulty determining whether a payment received is a capital payment then you should contact Helpline.