Readers’ forum: Division of interests

My client has asked my opinion on the following plan. He owns two properties that are let and he would like to transfer a 10% interest in one property to his daughter and a 10% interest in the other to his granddaughter. He would then divide the rental income from each property in the proportions of 75% to himself and the other 25% from each property to the daughter and granddaughter.

I must admit that I am not too sure why he only wants to transfer a 10% interest rather than 25% in the first place but perhaps it is to minimise the potential capital gains tax liability that will arise.

I believe that I have read about the possibility of differing income and capital divisions of let property in the past but I am not sure whether this is still possible. Would this be caught by any...