A little-known council tax discount highlighted by Martin Lewis could save people thousands of pounds on their council tax this year, as bills are set to increase again next month.

The Money Saving Expert has previously raised awareness of the “very obscure” council tax discount which was so “undercover” that even some councils were unaware it exists.

The Severe Mental Impairment (SMI) council tax discount could reduce a households council tax bill by 25% a year, with Mr Lewis advising viewers that at least 100,000 eligible people are currently missing out on the discount.

Mr Lewis said: "There are qualifications you have to go through [to claim it] then you may be eligible to be discounted for council tax purposes.

"Now what that means is, let's imagine it was me, and me and Angelica were a couple living together.

"I've got SMI, so Angelica is the only adult in the household who is eligible to pay council tax, so you are going to get the 25% single person's discount. It can be backdated, and some people get thousands of pounds.

"It is so undercovered that some offices when you call them up don't even know it exists.

"If you think you know anyone in that position look up the Severe Mental Impairment council tax discount and there are probably 100,000 people out there missing out."

What you need to do in order to claim the discount differs depending on whether you are in England and Scotland or in Wales.

In England and Scotland, you will need to get a claim form from your council, a doctor’s diagnosis and some supporting evidence to accompany the form.

While in Wales you can print the application form from the Welsh Government website before getting a doctor’s diagnosis and sending your form to your local council tax office.

When your claim is accepted, the discount should be applied automatically each year, meaning you will not need to reapply.

Who does not have to pay council tax?

Some people do not have to pay council tax which includes:

  • under 18 years old
  • on certain apprentice schemes
  • 18 or 19 years old and in full-time education
  • a full-time student at college or university
  • under 25 years old and get funding from the Education and Skills Funding Agency
  • a student nurse
  • a foreign language assistant registered with the British Council
  • severely mentally impaired
  • a live-in carer for someone who is not your partner, spouse, or child under 18
  • a diplomat

Additionally, you will get 25% off your bill if you pay Council Tax and either live on your own and everyone else in your house is disregarded.