I have a client and his brother with a commercial shop and a flat above in Bolton. They want to split the title deed so the commercial shop retains the freehold and the buy-to-let is a leasehold to be mortgaged. As a freeholder cannot grant a lease to himself, I believe that the client and brother could just grant a lease to the client alone, but I think I then potentially have a capital gains tax (CGT) disposal on the market value of the lease for the brother (but no stamp duty land tax (SDLT) as no actual consideration). What would both the parties tax positions be please? 

Arthur Weller replies: 

If the client was also a joint owner of the freehold of the flat above, what would it help to grant a lease to the client alone? Maybe you should consider transferring the freehold to an outsider (e.g. a limited company) and at the same time the company grants a very long lease back to the individuals, (i.e. a 'sale and leaseback'). If you follow the instructions in HMRC’s internal manual Capital Gains manual and HMRC’s Stamp Duty Land Tax manual , maybe you can get away with no CGT and no SDLT.