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Tax Liability after repatriation to UK
Selling UK house CGT liabilities
10.Apr.2020, 05:47 AM
Hi, after some help on tax liability. We are repatriating to UK after living in Sweden for 3 years. We own a house in the UK which was purchased 8 years before our arrival in Sweden (so not purchased whilst living in Sweden). If we sell the house on our return to the UK are we liable for CGT in Sweden? Do we need to wait until the next tax year, eg 2021 before we make the sale to avoid ? Any advice would be appreciated
10.Apr.2020, 06:21 AM
A point to note you'll only pay tax in sweden on the increase in value whilst in sweden, ie years 5-8. Given covid19, impending recession / depression I doubt there is going to be any profit to worry about. The market has crashed.
Ps. How will they ever know? It could also take a while to sell, estate agents, surveyors, valuers aren't allowed to work.
14.Apr.2020, 10:19 PM
The UK and Sweden allow "split year" treatment. Under this treatment you pay taxes on all global income to Skatteverket until the point that you stop being a tax resident of Sweden and start being a resident of the UK. As long as you follow the process and only sell your UK property after you are considered a permanent resident of the UK, then you will not be liable for Swedish CGT.
Naturally, it's important to follow the have process and have supporting paperwork. I expect that there is a process to notify Skatteverket that you are leaving, and possibly one for HMRC to notify that you are a resident again. Even HMRC doesn't have such a process, it would be sensible to send them a signed-for letter, just in case Skatteverket comes knocking; even after you move back, you will still have a relationship with the Swedish authorities -- you will still need to complete a Swedish tax return for your time spent here in 2020, and I guess you might have a pension here too. For pension purposes, it might be worth thinking about a backup to Mobile BankID - when you change your phone you won't be able to pop into your local bank branch in Stockholm to get it set up again, and you'll probably need access to Skatteverket / you pension providing for a long time to come - I seem to remember that there's some kind of USB BankID that you can connect to your PC.
Finally, over the last few years, HMRC has changed CGT rules. You might want to check that you still qualify for CGT relief on your UK property if you have had a 3-year break in occupancy of the property.
I used the split-year policy when I moved to Sweden two years ago (and suffered a fiddly tax return that year!) but I'm no tax lawyer, so you will need to research these policies yourself to confirm that they work for your situation.
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