Hey
Ouch. Percentage issues aside (interesting that he has the money side all worked out), he has put the cart before the horse.
Before getting into the who owns what side, there is the issue of what it could do to your relationship. You might want to work something out for those reasons. Not that you should have to, it is just a consideration. Unlike Tom I think that by the letter of the law your brother is wrong, but like Tom I think 1) He's your brother and 2) The chances of you making money from your song is almost negligible. In fact the cahnces of the album making money are almost negligible. A band has a better chance of winning the lottery than becoming successful, and that is with a full band working on getting success and working to learn how to make their band successful. No budget for promoting your album? Even if you have the best songs and best recordings using starts to record the songs.... it almost certainly won't make enough to cover the cost to make it.
What you and your brother have is more likely to fall under what they call a "vanity" project. ie you are doing it because you want to "put out an album" as much for sentimental reasons as anything else, not to build a music career. Nothing wrong with that, but it is better that you call a spade a spade.
In song copyright terms, the fact is that the parts of the song that are copyrightable, are the melody and the lyrics... only. Chords, key changes etc, fall under arrangement. You are based in Wales, I think you said in your intro post? In which case it falls under UK laws. Song copyright is managed by PRS (Performing rights society). Songs do not need to be registered anywhere in the UK 9though if you release music on the internet it is wise to register them with the US copyright office as that is the largest English speaking market place. In the UK, copyright exists at the time of writing. Recordings are governed by MCPS.
Some bands divide ownership equally, like Queen, I believe, others don't (like the Beatles), but that is because that is how they each view "writing". In legal terms, those who write the words and the melody are the song writers. Those who contribute to the arrangement (such as chords) are arrangers. Those who perform on a recording are entitled to a share of the recording profits unless they waive it, even if they accept a fee... and on it goes.
I am not a lawyer. My advice only comes from experience. You should be able to get exact legal advice from an Ents lawyer, either privately or go through the Musician's Union or PRS.... if you go down that route.
What i would consider doing is explaining to your brother what the copyrightable parts of a song are, and that the writers of those parts are the songwriters, but that you do value his input to the song and if it is that important to him then you will in some way share the writing credits to the song. What level is up to you.
Just my two cents.
Cheers
John