Council Tax – Exemption due to mental health

The question ‘who is liable to pay council tax or could be exempt?’ cannot always be answered without taking into consideration a number of factors.  A property could be exempt because of it’s condition or use. A person because of their age or job status could also be exempt. What about their health; can a person be exempt due to health reasons?

Yes, there are several reasons why someone can gain exemption of council tax. One of the reasons is, a person having a severe mental health condition.

The council will allow a person who is liable to pay council tax to be exempt if he/she is diagnosed with a Severe Mental Impairment (SMI). This means the claimant has a permanent condition which severely affects their intellectual or social functioning. This can include conditions like Parkinson’s, dementia, and learning disabilities. Other health conditions could be paranoid schizophrenia, bipolar, personality disorder, and other mental health conditions.

To apply for exemption of council tax because you have been diagnosed a SMI, you will need to contact the council, and they will send you the forms. Within the forms, you will receive a certificate that your doctor needs to complete, so confirming you are diagnosed with a SMI. This is a free service so your doctor cannot charge you.

You will also need to confirm you are receiving a qualifying benefit.

Qualifying Benefits for Council Tax SMI Discount/Exemption

  • Incapacity Benefit (IB) (either short-term IB, long-term IB or long-term IB for widows and widowers)
  • Employment and Support Allowance (ESA)
  • Attendance Allowance (AA)
  • Severe Disablement Allowance (SDA)
  • The highest or middle-rate component of Disability Living Allowance (DLA)
  • Standard or enhanced daily living component of Personal Independence Payment (PIP)
  • Armed Forces Independence Payment (AFIP)
  • An increase in disablement pension for constant attendance
  • Disabled person’s tax credit, but only if this is because of the prior receipt of IB or SDA or from 1st April 1997 Income Support which included a disability premium paid because of the claimant’s incapacity for work
  • Unemployability supplement (this was abolished in 1987 but existing claimants remain entitled)
  • Constant attendance allowance payable under the industrial injuries or war pension scheme
  • Unemployability allowance payable under the industrial injuries or war pension scheme
  • From 1st April 1994, income support which includes a disability premium because of the claimant’s incapacity to work

No longer liable for council tax arrears

Once approved, the exemption of council tax is taken from when the claimant was first awarded their qualifying benefit or when their doctor said the claimant was first diagnosed a SMI, whichever is the most recent date. This means, if the claimant had incurred council tax arrears from previous years, the exemption could go back to the time when the arrears was registered, if their SMI or benefit was in force from that time. Therefore, the claimant is no longer liable for the arrears during that period.

Example: A claimant applies for exemption on 18th June 2020. The award is granted because the claimant has provided a completed & signed certificate from their doctor. The claimant’s doctor stated the SMI was diagnosed in August 2012. The claimant has also shown to be receiving a qualifying benefit, such as PIP, which was awarded from January 2015. Therefore, the claimant’s exemption will start from January 2015. It is noted the claimant has council tax arrears for the years 2017/18, 2018/19 & 2019/20. Total arrears = £2000.

The claimant will no longer be liable for the arrears of £2000 and exempt of any future council tax relating to their 25% liability.

Back payment 

There are situations where a claimant has maintained their council tax payments so not in arrears. In this case the claimant will receive a back payment.  Using the example above but the claimant has maintained council tax payments, so has paid council tax for;

2017/18, 2018/19, & 2019/20. Total payments = £3,300

The claimant will receive a back payment of £3,300