The Income Tax (Exemption of Kinship Allowance Payments in Kinship Zones) Order 2026 was made by the Treasury on 18 May 2026, laid before the House of Commons on 19 May 2026, and comes into force on 9 June 2026. The measure is narrow in scope but clear in purpose: it removes an income tax charge from certain kinship allowance payments made under the Kinship Zones pilot in England and Wales. According to the Order, the amendment is made under section 747 of the Income Tax (Trading and Other Income) Act 2005. It sits within an existing part of the tax code that already exempts specified payments to adopters and other carers.
The legal change is precise. Article 2 amends section 744 of the 2005 Act by inserting a new paragraph (k) into subsection (1). That addition brings kinship allowance payments within the exemption where they are paid to a person caring for a child under section 1 of the Localism Act 2011 and under the scheme known as Kinship Zones. A linked amendment to section 744(2) updates the cross-reference so that the new paragraph (k) is treated in the same way as the other exempt categories already listed in the statute. In practice, the Order does not create a new support scheme by itself; it changes the tax treatment of payments made under a separate pilot.
The explanatory note states that the Department for Education will fund selected local authorities within Kinship Zones. Those authorities will then use the general power in section 1 of the Localism Act 2011 to provide a weekly financial allowance to eligible kinship carers. The group affected is therefore limited. The exemption applies to carers receiving the Kinship Zones allowance through participating local authorities, rather than to all kinship carers across England and Wales. That distinction matters for councils, advisers and families checking whether a particular payment falls inside the new rule.
In plain English, the Order allows qualifying carers to keep the allowance without an income tax charge under this part of the code. A payment intended as support for a child’s care will not be reduced by tax where it meets the conditions set out in the new paragraph. The practical effect is straightforward. For qualifying Kinship Zones payments, the allowance is treated as exempt income for these purposes, rather than as money that must be brought into charge under the trading and other income rules.
The Order is also notable for what it does not do. It does not set the value of the weekly allowance, define local eligibility in detail, or extend kinship support beyond the authorities chosen for the pilot. Those points sit with the Department for Education’s programme design and with local delivery arrangements. It is equally not a general tax exemption for every kinship-related payment. The drafting is tied to the scheme by name and to payments made under the Localism Act 2011 power. Any wider change to the tax treatment of kinship care support would need separate legislation or a broader amendment to the parent Act.
The instrument was signed by Gen Kitchen and Christian Wakeford as two of the Lords Commissioners of His Majesty’s Treasury. The explanatory material also states that a Tax Information and Impact Note will be published through the government’s TIIN collection, offering a fuller account of the fiscal and administrative effect. For operational detail, the note points readers to the Department for Education’s Kinship Zones programme specification. It also records that paper copies of the guidance are available for inspection at HMRC’s offices in Parliament Street.
As a piece of tax legislation, the Order is short and highly targeted. Its policy value lies in aligning the tax code with a pilot designed to support kinship care arrangements, so that the weekly allowance reaches eligible carers on a tax-free basis rather than being partly absorbed by income tax. For readers tracking family policy and tax administration, the main point is simple. From 9 June 2026, qualifying Kinship Zones payments are added to the list of exempt payments in section 744 of the Income Tax (Trading and Other Income) Act 2005 for England and Wales.