My friend and I bought a house split into two (i.e. ground and first floor). However, it is all under one title, and we jointly own the title. For the purposes of council tax, we each pay a separate council tax bill as if they were two separate homes; even the utility bills are separate. We would like to sell our flats separately by granting leases; however, we are concerned that we would be liable to capital gains tax (CGT) because we are splitting a title. We believe we should qualify for private residence relief, as we each own one flat; however, when we bought it the two flats were under one title, which we didn't bother splitting at the time.

Arthur Weller replies:
See HMRC’s guidance at www.gov.uk/hmrc-internalmanuals/capital-gains-manual/cg70230. From what you have described, it seems to me that although the legal ownership of these two flats is jointly owned, nevertheless the beneficial ownership is separate, with you owning one flat absolutely, and your friend owning the other flat absolutely. This is because there appears to be an implied bare trust here. Ifso, you do not have an issue, because tax is predominantly concerned with beneficial ownership, and each one of you owns 100% of the beneficial ownership of their own flat. So, private residence relief can be claimed, as in a regular situation.