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Preparing for the Abolition of the Non-Resident Dividend Tax Credit: What UK Non-Residents Need to Know
From 6 April 2026, non-UK residents receiving UK dividend income alongside rental or partnership income will lose the notional tax credit – a change that aligns their tax treatment with UK residents and could increase their tax bills.
By NomadicTax Research Team • 5-8 min read • March 21, 2026
## What’s changing?
- The UK government has announced that the **notional tax credit on dividends** for non-UK residents will be **abolished**. This change applies to individuals who receive UK dividend income and also have UK rental or partnership income. ([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))
- It will come into effect for distributions **on or after 6 April 2026**. ([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))
## Why is this happening?
- Currently, non-UK residents get a tax credit to match a rate UK residents used to have. But since the UK removed the dividend tax credit for residents, non-residents retaining the credit is inconsistent. The change aims to **level the playing field** and remove an unfair advantage. ([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))
- Government estimates fewer than 1,000 individuals will be affected annually. It notes that this change has negligible impact on tax revenue. ([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 will be affected?
- Non-UK resident individuals with **UK dividend income** **and** **UK rental or partnership income**. If you have only dividend income, or only rental/partnership income, this specifically targets the combination. ([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))
- UK residents are unaffected. ([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))
## Practical implications
- These non-residents will no longer receive the **notional tax credit** when calculating UK tax due on UK dividends. That may increase your taxable income, depending on your situation.
- You still submit a **Self Assessment return**, but the element involving the credit will be removed, and related legislative references to section 399 will be repealed. ([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))
## Actionable steps
1. Review your income sources: Do you receive both dividends and rental/partnership income from UK sources?
2. **Estimate the change**: Calculate expected UK dividend income and model tax liabilities with and without the tax credit to see how much more tax you might owe starting April 2026.
3. Seek tax advice: With multiple income streams cross-border, consulting a specialist in international personal tax matters will help you plan.
4. Update your tax planning: If you were structuring your income expecting the tax credit, you may need to rethink investment and ownership structures or dividends timing prior to 6 April 2026.
## Example scenario
> **Emma**, based in France, owns UK rental property generating £12,000/year and holds shares paying £5,000 dividends annually. Under the old rules, for 3 years she benefited from a notional tax credit on the £5,000, reducing her UK tax bill. After 6 April 2026 she loses the tax credit and will pay UK tax on the full amount without that relief, increasing her tax due.
**Bottom line:** If you are a non-UK resident with these income sources, these changes could increase UK tax liabilities from April 2026. Now is the time to prepare and revise your cross-border income strategy.