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Non-UK Residents & Dividend Tax Credit: What the Abolition Means for You
From 6 April 2026, non-residents receiving UK dividends will no longer get the notional tax credit. Here’s what that change looks like in practice and what steps affected individuals should take.
By NomadicTax Research Team • 5-8 min read • May 18, 2026
## Background: What was the notional tax credit?
Under section 399, non-UK residents who both received UK dividend income and UK rental or partnership income were granted a **notional tax credit** equal to what they were assumed to have paid at the UK “Ordinary Rate” of tax on dividends. It was a way to align tax treatment with UK resident taxpayers.([gov.uk](https://www.gov.uk/government/publications/abolition-of-the-dividend-tax-credit-for-non-uk-residents/abolition-of-the-notional-tax-credit-on-dividends-received-by-non-uk-residents?utm_source=openai))
## Key change effective 6 April 2026
From **6 April 2026**, this tax credit is **abolished**. That means:
- Non-UK residents with UK dividends will *no longer receive this credit*.([gov.uk](https://www.gov.uk/government/publications/abolition-of-the-dividend-tax-credit-for-non-uk-residents/abolition-of-the-notional-tax-credit-on-dividends-received-by-non-uk-residents?utm_source=openai))
- Those who also have UK rental or partnership income and previously benefited under this scheme will face alignment with UK resident treatment.([gov.uk](https://www.gov.uk/government/publications/abolition-of-the-dividend-tax-credit-for-non-uk-residents/abolition-of-the-notional-tax-credit-on-dividends-received-by-non-uk-residents?utm_source=openai))
## Who’s affected and how
Affected individuals are few each year—**fewer than 1,000 non-UK residents** with UK dividend income and UK rental or partnership income will be impacted.([gov.uk](https://www.gov.uk/government/publications/abolition-of-the-dividend-tax-credit-for-non-uk-residents/abolition-of-the-notional-tax-credit-on-dividends-received-by-non-uk-residents?utm_source=openai))
### Example scenarios:
| Situation | Impact before 6 April 2026 | Impact after|
|---|---|---|
| Alice lives abroad, receives £1,000 UK dividends and £5,000 UK rental income | Gets notional credit offsetting UK tax assuming ordinary rate on dividends | No more credit; may pay more UK tax on those dividends |
| Bob with **only** dividend income and no rental/partnership income | Probably didn’t benefit from section 399 anyway | Change likely minimal, depending on double tax treaties |
## What you should do
- Review your UK dividend income together with any other UK source (rental/partnership) for 2025-26 and onward.
- Estimate tax without the credit to anticipate higher UK tax liability.
- If resident abroad, check double taxation agreement (DTA). You might be eligible for relief or tax credits in your country of residence. HMRC’s HS304 helps with this.([gov.uk](https://www.gov.uk/government/publications/non-residents-relief-under-double-taxation-agreements-hs304-self-assessment-helpsheet/hs304-non-residents-relief-under-double-taxation-agreements-2026?utm_source=openai))
- Consult a UK tax professional if your cross-border income is complex—changes could alter net returns materially.
## Considerations for entity setup and planning
- Non-UK residents receiving dividend income via a UK company should review how entities are structured vs alternatives (e.g. holding companies).
- Partnerships, trust arrangements, and rental properties create tax interactions—ensure income is declared properly.
- Understand whether being non-resident still gives you home country relief and whether credit relief is accessible under relevant treaties.
## Conclusion
The abolition of the notional tax credit simplifies UK tax treatment for non-residents and removes a benefit minority non-UK resident taxpayers had relative to resident taxpayers. The impact may be modest but for those directly affected it’s important to model the post-credit position early to avoid surprises during Self Assessment.