I am the full registered owner of a rented flat, a second property, which I would like to transfer into partial 'joint ownership' with my son. The reason for this is so that my son becomes the immediate full owner of this flat on my passing, by-passing the provisions in my last will and testament (and not for capital gains tax (CGT) reasons). If I do go ahead with the transfer into both of our names, with say only 1% apportioned in his ownership, would I have to immediately pay CGT on half the capital gain on the flat, or the 1%, 50%, or not at all? I'm not sure that 'joint ownership’ allows for a partial ownership by the Land Registry anyway, or whether it would be regarded by HMRC as a 50:50 split. Am I just being stupid undertaking this transfer at all? Also, could HMRC see a 1% transfer as an 'undervalue' transfer and charge me CGT on 50% should I go ahead?

Arthur Weller replies.
See www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem9210 and 9220 (or www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg70500p). In order to achieve an automatic transfer on death you would need to put the property into 'joint tenancy'. This would be treated by HMRC as a transfer of 50% of the property to your son, and you would need to pay capital gains tax on half of the property, based on its current market value. You are probably better off changing your will, so that he receives the whole property on your death.