Up to 100,000 of the most vulnerable people in society are missing out on a council tax discount worth £100s or £1,000s – as little is known about it, and some councils are giving out misinformation. It’s time to change that.

If you have, or know someone living with dementia, Alzheimer’s, Multiple Sclerosis, Parkinson’s or other similar conditions – it’s important you take five minutes now to read about the Severely Mentally Impaired (SMI) council tax discount.

This discount typically saves people £400/year

Like students, those who qualify for the SMI discount are disregarded for council tax purpose. That means those living alone don’t pay any council tax at all, while those living with another - often their carer - qualify for a 25% reduction. This is worth an average of £400/year.

In some cases, it’s also possible to get the discount backdated. Though it’s up to individual councils whether they allow this – so it’s a postcode lottery.

Bob’s email shows the impact. “Saw you on This Morning talking about this. In short wife 2 strokes since 2009, we applied to council and got both reduction in council tax and over £2,000 refund. Yippy. Thank you. I know of others in same boat so I am helping them.”

Personally, due to the range of misinformation that’s given out on this (as I’ll run through below), I think the rules need changing so that all councils backdate it.

Who’s eligible?

For someone to qualify for a SMI council tax discount, both of the following must apply:

1) They must be medically certified as having a severe mental impairment. This is not specific to any particular medical condition – it is officially defined as someone who has “a severe impairment of intelligence and social functioning (however caused) which appears to be permanent.”

So it’s not a question of someone having dementia or Parkinson’s automatically qualifying. Some will, some won’t. It’s up to a GP to decide and they will have to sign the form (which they should not charge you to do).

2) They must be eligible for one of a range of benefits. These include; incapacity benefit, disability living allowance, personal independence payments, severe disablement allowance, income support, constant attendance allowance, disability working allowance, some forms of universal credit and others.

Just to be clear, some councils wrongly tell people they need to be receiving these benefits. That's not correct – the law simply says you need to be eligible for them – this may well act as a prompt to claim them too.

Tool up before you apply to the council, misinformation is rife

It is quite likely the person who has the SMI will not be able to claim themselves, in which case their carer can do it for them. You’ll need to fill out a claim form from your council to register for the discount. Find contact details at www.gov.uk/apply-council-tax-reduction.

I’ve been campaigning to raise awareness on this 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 prompted the team at my site www.moneysavingexpert.com to launch an investigation, consisting of Freedom of Information (FOI) requests to all councils in England, Scotland and Wales, and a mystery shopper exercise of 100 councils.

The FOI results from 265 councils showed 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 differences in the population make up alone.

In the mystery shopping exercise nearly 70% of councils gave out some form of misinformation; from not knowing the eligibility criteria, down to five call handlers being unaware of the existence of the SMI discount at all.

So if you are calling up to arrange it, make sure you understand it yourself. If they give you the wrong information be polite but firm.

More help and guidance if you’re struggling with this at charities including www.citizensadvice.org.uk, www.dementiauk.org www.carersuk.org or www.alzheimers.org.uk. Do let me know via twitter @martinslewis how you do on this.

Martin Lewis is the Founder and Chair of MoneySavingExpert.com. To join the 12 million people who get his free Money Tips weekly email, go to www.moneysavingexpert.com/latesttip.