People with certain health conditions might be entitled to a partial or full discount on their council tax, potentially leading to significant annual savings for households. MoneySavingExpert (MSE) has highlighted that hundreds of thousands in England, Scotland, and Wales could be missing out on a council tax reduction without their knowledge.

This revelation comes as council tax bills have risen in April, with most councils choosing to increase charges by up to, or close to, the maximum permitted limit. Over the last two years, council tax has seen an average increase of 5.1%. As of April 1, the standard annual band D council tax bill - used as the benchmark for these charges - is now £2,280. This amount is a £109 increase from the previous year and represents a 20% rise from five years ago when the average was £1,898.

However, individuals classified as "severely mentally impaired" could receive a discount of up to 50% on their bill, or in some cases, have it completely waived, according to the Manchester Evening News, reports .

To qualify for this discount, the government stipulates two criteria:

The medical conditions that may render you exempt from paying council tax. Although the term "severely mentally impaired" is not precisely defined by the government, MSE suggests several conditions that could make someone eligible for the discount.

MSE identifies the following conditions as possible qualifiers:

However, the eligibility for a discount depends on individual circumstances, and simply having one of the specified conditions does not automatically entitle someone to a reduction. MSE explains: "You can be diagnosed as SMI as a result of a range of conditions - which could include things like dementia, Schizophrenia, multiple sclerosis, having had a stroke, or having had an accident which permanently affects your intelligence and social functioning.

"It's important to understand that many conditions can lead to being classified as SMI, but no single condition guarantees that a person will also be considered SMI. The designation of SMI is a medical diagnosis in its own right."

To qualify for the council tax discount, a medical practitioner must certify that the individual is "severely mentally impaired". Legally, this means the person has "a severe impairment of intelligence and social functioning (however caused) which appears to be permanent".

What other criteria need to be met?

Applicants for the discount must provide proof that they are receiving certain benefits, or at least meet the criteria to receive them. For more information, the gov.uk website offers further guidance, and local councils can provide detailed lists of qualifying conditions for the discount on their websites.

How much could you potentially save on your council tax bill?

If you live alone, you could be eligible for a 100% exemption from council tax, effectively relieving you of any council tax payments. You may qualify for a 50% reduction on your council tax bill if you share your home exclusively with individuals who are 'disregarded' for council tax purposes - those not counted in the number of household residents. This includes people under 18, those enrolled in certain apprenticeship schemes, full-time students, live-in carers and diplomats.

Even if your living situation includes one other person who doesn't qualify for the discount, you could still receive a 25% reduction. Depending on your local council's policies, you might also be able to claim back payments. According to MSE, some councils may apply the discount retroactively up to six years prior, however, each council has its own rules and there is no legal requirement for them to backdate the discount.