Abstract Kinetic and hydrodynamic theories are widely employed for describing the collective behavior of active matter systems. At the fluctuating level, these have been obtained from explicit coarse-graining procedures in the limit where each particle interacts weakly with many others, so that the total forces and torques exerted on each of them is of order unity at all times. Such limit is however not relevant for dilute systems that mostly interact via alignment; there, collisions are rare and make the self-propulsion direction to change abruptly. We derive a fluctuating kinetic theory, and the corresponding fluctuating hydrodynamics, for aligning self-propelled particles in the limit of dilute systems. We discover that fluctuations at kinetic level are not Gaussian and depend on the interactions among particles, but that only their Gaussian part survives in the hydrodynamic limit. At variance with fluctuating hydrodynamics for weakly interacting particles, we find that the noise variance at hydrodynamic level depends on the interaction rules among particles and is proportional to the square of the density, reflecting the binary nature of the aligning process. The results of this paper, which are derived for polar self-propelled particles with polar alignment, could be straightforwardly extended to polar particles with nematic alignment or to fully nematic systems.