Readers’ forum: Is profit made from loan repayment a capital gain?

My client made a loan of £100 000 to an individual in 2013 and a further loan of £75 000 in 2014. The loan was stated to be interest-free but repayable at a premium based only on the increase in collateral premium insurance.

This duly took place last month: the client has made a profit of £64 000. My question is simple – although the answer may not be – is this a capital gain for the 2022-23 tax return or an income profit? It is in effect a ‘deep discount’ loan but the rules for those relate to loans to companies I believe.

Can anyone point me to a case or legislation that gives an unequivocal answer on the treatment of this loan?

Query 20 027 – Shark.

The £64 000 is not taxable but explain how it arose in the tax return.

I don’t think...