Councils overcharging 10,000s who are ‘Severely Mentally Impaired’

Martin Lewis: “It’s tough not to think the cause is just mass council ineptitude”

- Many with conditions such as dementia are owed council tax discount and rebate worth £1000s

- 265 FOI requests show it’s a postcode lottery with uptake 77x higher in some areas than others

- Two thirds of councils gave incorrect information while some frontline staff unaware of the discount

- Martin Lewis: “It’s tough not to think the cause is just mass council ineptitude”

Today the UK’s biggest consumer website is publishing a major new piece of research, The Disregarded Discount, which shows up to 100,000 people entitled to a substantial council tax discount are missing out. This is likely due to inappropriate information being given about the discount by local councils. MSE is calling on all councils in England, Scotland and Wales to urgently review their processes and asking central Government to clarify and standardise the application process(1).

Council tax rules(2) state that, like students, those diagnosed as ‘Severely Mentally Impaired’ – this includes conditions such as dementia, including Alzheimer’s, but many others apply – and who are eligible for certain benefits(3), are disregarded for council tax purposes.This means if they live with one other person, usually their carer, then the household is entitled to a 25% council tax discount. Those living alone are entitled to a 100% discount, so they don’t pay council tax at all. It is worth an average £400/yr(4) and those who haven’t claimed may be able to get the discount backdated.

Many people don’t realise this, and MSE has been campaigning to raise awareness since 2016.

There have been successes such as Paul: “Thanks - with your guide, just helped my parents claim back £2,400 council tax as dad has Parkinson's."

Yet many people have struggled to claim, like Philip: “My wife started receiving benefits for Parkinson’s in 2001. My council originally told me that we didn’t qualify as we had savings. However, it eventually admitted it had given us wrong information and we were given a 25% discount.”

This mixed feedback from MSE readers prompted the launch of the investigation, consisting of Freedom of Information (FOI) requests to all councils in England, Scotland and Wales, and a mystery shopper exercise of 100 councils. Findings show:

· This is a postcode lottery. FOI results from 265 councils(5), representing almost 20 million households, show a staggering difference in those claiming the discount – uptake in Renfrewshire is 77 times higher than just 40 miles away in East Ayrshire – which is unlikely to be accounted for by demographic differences alone.

· Two thirds of councils provided incorrect information. During the mystery shop exercise, council tax staff were unable to clearly explain to the MSE ‘applicant’ the criteria for eligibility or how to submit a claim for the discount.

- Five call handlers were unaware of the existence of the SMI discount, with some confusing it for a means-tested benefit.

- 69 out of 100 gave out some form of incorrect information eg, that the form to make a claim was not available online, even though it was, and that the claimant needed to be in receipt of certain benefits rather than just eligible for – potentially deterring someone from making a claim in the first place.

- A quarter (26) provided advice that was completely correct.

· There is some correlation between low uptake and poor information. In a second mystery shop, 35% of the councils with the highest SMI uptake correctly told the ‘applicant’ how to make a claim, vs just 5% of the councils with the lowest uptake.

· It is likely up to 100,000 people are missing out. There are no official figures for how many potential claimants are failing to receive the SMI discount. MSE’s back-of-the-envelope calculation shows it is up to 100,000 people. But the Government needs to urgently carry out an assessment of how many people could be eligible.

Martin Lewis, founder of says: “The law rightfully recognises that many vulnerable people who have a severe mental impairment such as dementia or Alzheimer’s are entitled to a council tax reduction. Sadly many councils do not and the result is that society’s most vulnerable face a postcode lottery with huge variance in take up depending on where people live.

“I would urge any family affected by this to speak to their local council. Not only are many due a reduction of £400+ a year, but it can be backdated for years. We’ve already had a number of successes where people have been paid back £1,000s – though this again depends on a postcode lottery.

“In some council areas the number of people actually receiving the discount is paltry. As councils don’t actually lose money from this – it’s funded by central Government – it’s tough not to think the cause is just mass council ineptitude in administering it. Local councils need to urgently review their processes in order to reduce the amount of misinformation given out by frontline staff. They could also help by proactively communicating the discount in their standard literature. Meanwhile we’ve put full free claiming help on

“The people who are missing out on this are amongst the most vulnerable in our society and can’t fight for themselves.They should not be left to battle this alone. Better awareness is fundamental – and all councils should agree to allow backdating, or at the very least each council should publish a clear policy. There should be an urgent review by central and devolved government of how local councils are applying the SMI discount, including setting up a standardised procedure, with one form, to make it easy to claim, regardless of postcode.”

Major charities are supporting’s campaign, including Dementia UK, Carers UK and Alzheimer’s Society. Dr Hilda Hayo, chief executive of Dementia UK, says: “A diagnosis of dementia can be devastating for families, and financial implications can play a significant role in that. Many people with dementia and their families simply do not know that they are eligible for a council tax reduction or exemption. Lack of awareness and training amongst council staff regarding the exemption do not help and we are pleased to support MoneySavingExpert’s campaign to raise awareness of this.”

Emily Holzhausen OBE, Director of Policy and Public Affairs at Carers UK, says: ““We advise hundreds of carers every year who miss out on council tax discounts because they are unaware of them. For those carers who do go on to receive the discount, the difference is noticeable.

“With council budgets under so much pressure, SMI council tax discounts offer an opportunity for local authorities to provide more support to thousands of carers by improving their incomes and ensuring they are aware of the discount.We also know that this would help carers to improve their own mental health and well-being. We urge every council to look at improving their advice and information to carers on council tax discounts.”

Nicola O’Brien, Head of Policy and Campaigns at Alzheimer’s Society, says: “Many people with dementia and their families are already under devastating financial strain as a result of their condition, with some forced to spend hundreds of thousands to get the essential care they need from the broken social care system. Lack of awareness and information about council tax discounts, and other financial support out there, only make the situation harder. It’s crucial that discounts are clearly signposted to, and simple to apply for, to make sure people get the support they are entitled to. To qualify for a reduction a person with dementia must describe themselves with ‘severe mental impairment’, which many find extreme and inappropriate. It is yet another unnecessary barrier to people accessing this vital financial relief.”


Notes to editors

For the full report, the Disregarded Discount, please get in touch with the press office.

(1) In its report, calls for:

- Central and devolved Governments to conduct an urgent review of local authority procedures regarding the council tax SMI discount.

- A standardised application procedure to be introduced across all councils resulting in a clear and simple process for people to claim the SMI discount and rebates.

- Frontline council staff to be adequately trained with a full working knowledge of the discount and how to claim it.

- A clear policy for backdated claims and rebates to be implemented across all councils.

(2) By law, someone who has been medically certified as having a permanent condition that affects their intelligence and social functioning (eg, Alzheimer's or Parkinson's, but many other conditions may apply) is 'disregarded for council tax purposes' in England, Scotland and Wales. It means you can claim:

- 25% discount- if you live with someone with a severe mental impairment and no other adults, or only adults who are also disregarded for council tax purposes.

- 100% discount- if you have a severe mental impairment and live alone.

(3) To claim, you must be both medically certified as being severely mentally impaired, and eligible for (but not necessarily in receipt of) at least one of a list of benefits, which includes attendance allowance, incapacity benefit and employment and support allowance.

(4) The average band D council tax in England for 2017/18 will be £1,591, so 25% is £397.70.

(5) Councils with the lowest and highest proportion of people claiming the SMI reduction – FOI data obtained from 265 councils out of 380 across England, Scotland and Wales.

Bottom 10:


Uptake compared with council-tax-paying households

Proportion claiming SMI reduction

East Ayrshire Council

11 out of 57,392


Spelthorne Borough Council

10 out of 41,076


City of Edinburgh Council

90 out of 240,794


Great Yarmouth Borough Council

23 out of 47,117


Tower Hamlets Council

75 out of 119,440


Denbighshire County Council

29 out of 44,436


Hackney Council

88 out of 111,224


South Lanarkshire Council

119 out of 148,295


Wandsworth Council

114 out of 140,864


London Borough of Newham

126 out of 145,310


Top 10:


Uptake compared with council-tax-paying households

Proportion claiming SMI reduction

Renfrewshire Council

1,246 out of 84,604


Craven District Council

265 out of 26,335


East Dunbartonshire Council

447 out of 50,966


Surrey Heath Borough Council

296 out of 35,456


Ashford Borough Council

423 out of 51,362


South Norfolk Council

452 out of 57,717


Tandridge District Council

260 out of 35,740


Doncaster Council

1,172 out of 165,971


Dumfries and Galloway Council

518 out of 74,377


North Lanarkshire Council

973 out of 152,848


For more comments, please contact:

Katie Watts

Tel: 020 3846 2631

Mob: 07875 415 378

About Martin Lewis: Martin Lewis OBE, Money Saving Expert, is the journalist and consumer campaigner who created and is now the site’s Executive Chair. Martin also founded and chairs the Money and Mental Health Policy Institute charity.

He’s the UK’s most-googled man, Citizens Advice’s Consumer Champion of the Year, and has spearheaded major financial justice campaigns including bank charges reclaiming (over seven million template letters downloaded), PPI reclaiming (over six million) and a successful large-scale campaign to get financial education in schools. He has his own prime-time ITV programme, The Martin Lewis Money Show, as well as a range of other regular media slots. He was appointed OBE in the Queen’s Birthday Honours in June 2014.

About is dedicated to cutting consumers’ bills and fighting their corner. The free-to-use consumer finance help resource aims to show people how to save money on anything and everything, and campaigns for financial justice. It was set up in 2003 for just £100, and its free-to-use, ethical stance quickly made it the UK’s biggest independent money website, according to internet ranking site, and the number one ‘Business and Finance – Business Information’ site, according to Hitwise. It has more than 12 million people opted-in to receive the weekly MSE’s Money Tips email, and more than 16 million unique monthly site users who visit more than 28 million times a month. In September 2012, it joined the Group PLC.