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Councils overcharging tens of thousands of disabled people who are severely mentally impaired

04 October 2017

 New research by MoneySavingExpert.com says thousands of disabled people in England, Scotland and Wales are being overcharged up to £400 a year due to a council tax “postcode lottery”.

Its investigation is based on data obtained under the Freedom of Information Act and mystery-shopping exercises. It concludes up to 100,000 people who are entitled to a 25% council tax discount due to their poor mental health could be missing out, with a massive variation in uptake.

This is likely due to inappropriate information being given about the discount by local councils. Two-thirds of those councils we mystery-shopped gave incorrect info, while some frontline staff were apparently unaware of the existence of the discount.

There is some correlation between low uptake and poor information. In a second mystery shop, 35% of the councils with the highest uptake of the severely mentally impaired (SMI) discount correctly told the 'applicant' how to make a claim, vs just 5% of the councils with the lowest uptake.

Martin Lewis, founder of MoneySavingExpert.com, said:

"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.”

He added:

"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."

For more information go to www.moneysavingexpert.com

Note: Those disabled people agreed as "severely mentally impaired" don't have to pay the Council tax and two-person households, where one person is severely mentally impaired qualify for a 25% discount.

Council tax rules say that a person is exempt from council tax if they have a ‘severe mental impairment’. It says that "a person is severely mentally impaired if they have a severe impairment of intelligence and social functioning which appears to be permanent".

To get this you need a doctor to sign a medical certificate that says you are severely mentally impaired and get one of the following benefits:

  • DLA with the middle or highest rate care component
  • Personal Independence Payment Daily Living Component (standard or enhanced rate)
  • Attendance Allowance
  • Severe Disablement Allowance
  • Employment and Support Allowance
  • Incapacity Benefit
  • Income Support or Jobseekers Allowance with a disability premium
  • Working Tax Credit with the disability element