The local Authority is making ex gratia/compensation payments of £20,000 to former residents of a childrens home which was closed down following investigations into child abuse. These are one off payments to all former residents during the relevant period which was under investigation.

I know that capital does not affect WTC and that only the interest/income from capital would be relevant income.

Would the actual receipt of the payment be something that would affect the WTC calculation for the current year? Or would it immediately be classed as capital?

Any thoughts would be appreciated.

It would only be classed as income for WTC purposes if it was assessable to income tax, and I don't believe that this could possibly be taxable income. It has all the hallmarks of a capital payment.

Thank you Ariadne, that's the answer I wanted.