Benefits, tax and your special guardianship allowance

Written and reviewed by Patricia Hughes · Last updated 29 August 2026 · last reviewed 29 August 2026 · rates for 2026/27

Two rules that catch people out, and one benefit you have to claim for yourself.

Your allowance is not taxed, and does not reduce your benefits

Special guardianship allowance is treated as a residence-order allowance. It has been exempt from income tax since 6 April 2010, and it is disregarded as your income when your own means-tested benefits are worked out.

If your Universal Credit dropped when your allowance started, that is worth querying.

This is not the same as the deduction I ran into. I was receiving Universal Credit when my order was made, and what Child Benefit came off was my council's calculation, not my benefit. The two get confused easily, and they are answered by different people.

Guardian's Allowance, check whether you can claim it

It is a separate claim, and it is not paid automatically alongside Child Benefit.

Guardian's Allowance is a weekly payment for someone bringing up a child whose parents have died, or where one parent has died and the other cannot be traced, is serving a long prison sentence, or whose whereabouts are unknown.

It is worth £22.95 a week (2026-27) for each child, on top of anything else you receive.

• It is tax free.
• It is ignored for means-tested benefits.
• It is exempt from the benefit cap.

There are conditions, including about the parents' UK residence. It is worth a conversation with an adviser if there is any chance it applies.

The two-child limit has been abolished

From April 2026 the two-child limit in Universal Credit was removed.

This one is recent enough that I would check it against your own award notice rather than take my word for it. Benefit rates on this site change in the first full week of April, not on 1 April like your allowance, so for a few days each year the two do not line up.

If you are caring for three or more children and your Universal Credit has not changed, check your award.

Child Benefit

Child Benefit for the child you care for is yours to claim. Whether your council may take it into account when setting your allowance is a separate and contested question. But the answer is never to stop claiming it.

What you can check, and what you have to ask for

Nothing on this page depends on your council. Whether your allowance is taxed, whether it counts against your own benefits, who qualifies for Guardian's Allowance: all of it is published, and all of it is above with its source.

The one thing that is in no rulebook is how your council treated Child Benefit inside your own calculation. That lives in its arithmetic. Ask for the breakdown.