If you take at face value, that a residential home is an investment, and no harm was meant, the amount owed to your son is as follows.
10k as a proportion of the house valuation after the conversion was completed, applied to the house valuation on the property on the date of 18th birthday.
The so called investment, isn’t into part of a property, it’s into the property as a whole. When i put 10k into a stock, i’m not putting it into warehouse, i’m putting it into a business. What it gets used for is immaterial.
so as an example, house was worth 100k inject 10k thus its 10% the amount bought, thus if said investment is 300k on 18th birthday, amount due is 30k. (10% of 300k)
Irrespective of worth, the age, the behaviour of the investor, they bought a percentage in your speculative asset. Give them anything less, it is straight theft.
From a family inheritance tax perspective, you’ve also created an anomaly which needs to be fully documented too, otherwise potentionly DS will have to pay tax on the proceeds. Finally, because you didn’t use a tax wrapper, he probably should pay capital gains tax on the investment.
Families and money, can be incredibly naive sometimes outright intentionally vr uel, if i knew you personally, id be reporting you to the police for theft and hmrc for evasion.
I handle the investments for my godson, prudent investing in the likes of fundsmith, in the appropriate tax wrapper, he will be worth about £60k tax free next year when he turns 18…. The amount invested was £6k.
Your lack of financial knowledge should have meant you sought an advisor, or gained far more clarity from FIL.