IPDI distribution - income or capital?

I will appreciate some commentaries regarding the below. Thanks in advance:

Settlor owns an overseas charitable foundation, which owns an overseas company, which owns on overseas property. Settlor also has loan repayable to him by the overseas company that owns the overseas property but the company doesn’t have cash to repay the loan. The settlor and his spouse will use the overseas property exclusively and pay market value rent. Settlor wants to settle the loan repayable by the overseas company into an Immediate Post Death Interest (“IPDI”) trust for the benefit of his spouse. The intention is for the beneficiary (i.e. settlor’s spouse) to use the overseas property exclusively after the settlor’s death and for the loan repayable by the company to be waived annually to satisfy the market value rent of the property due from the beneficiary (the beneficiary will not receive any cash distribution from the IPDI to settle the rent, instead the loan repayable is reduced by the market value rent).

My initial thoughts were that the loan repayable should be capital distribution (as essentially, being an interest in possession trust, the loan repayable is treated as the beneficiary’s own asset and forms part of her estate and so if she is drawing down on her own asset, the drawdown can’t be income) and therefore, the annual market value rent that is used to reduce the loan won’t be liable to income tax in the beneficiary’s hands. However, HMRC’s Guidance at TSEM3784 says “The case of Jackson’s Trustees v CIR 25 TC 13 established that payments out of trust capital are income for tax purposes in the hands of a recipient where, by the terms of the relevant trust instrument regular payments out of capital are required to be made such that they can be treated as ‘annual payments’. This is comparatively rare, but the beneficiary is in effect given an annuity payable wholly out of capital.”

Does anyone have any thoughts on the above and useful legislation and/or HMRC Guidance that confirms whether the annual market value rent that will be used to reduce the loan repayable will be treated as income or capital distribution to the beneficiary?