Council Tax SMI Exemption 2026: What Has Changed

The Core Rules Are Unchanged

The severe mental impairment council tax discount and Class U exemption in England still work the same way they have since 1992. A person qualifies if a registered medical practitioner certifies they have a severe impairment of intelligence and social functioning that appears to be permanent, and they are entitled to a qualifying benefit. The discount depends on household composition — 25% if one other adult is counted, 50% or 100% if all adults are disregarded.

What has changed for the 2026/27 tax year is the regulatory landscape around the relief — benefit migrations, devolved legislation, and local authority premium powers that interact with SMI exemptions.

Universal Credit Migration Is Complete

The DWP's managed migration from legacy benefits to Universal Credit has now finished. Working-age claimants who previously held income-related Employment and Support Allowance (ESA) with the support component should now hold UC with the Limited Capability for Work and Work-Related Activity (LCWRA) element.

For SMI claims, this means the qualifying benefit may have changed from ESA to UC. The discount itself is unaffected — UC with LCWRA satisfies the statutory test just as ESA did. But if you or the council have not updated the benefit evidence since migration, the records may be out of date. It is worth requesting a current UC award notice showing the LCWRA element and providing it to the council's revenues department.

Anyone who had an SMI discount based on Incapacity Benefit, Severe Disablement Allowance, or income-related ESA and was not migrated to UC should check whether their legacy benefit is still in payment. If it ended because of a pension-age transition, check whether entitlement is preserved under the applicable rules; otherwise, a new qualifying benefit (such as Attendance Allowance) may need to be established.

Wales Now Has Separate Legislation

From 1 April 2026, The Council Tax (Discounts, Disregards and Exemptions) (Wales) Regulations 2026 took effect. This means England and Wales now operate under separate statutory instruments for SMI disregards and exemptions.

If you live in England, nothing changes practically — the same primary legislation (Local Government Finance Act 1992) and the same English secondary legislation (S.I. 1992/548 and S.I. 1992/558) apply. But if you are researching the rules, make sure you are reading guidance that applies to England specifically. Welsh rules now differ in some administrative details.

Empty Home and Second Home Premiums

The Levelling-up and Regeneration Act 2023 brought two changes relevant to SMI households:

Long-term empty premium. Since 1 April 2024, councils can charge a 100% premium on properties that have been unoccupied and substantially unfurnished for more than one year (previously two years). This doubles the council tax bill on empty properties.

Second home premium. Since 1 April 2025, councils can charge a 100% premium on second homes — properties that are periodically occupied and substantially furnished.

Both premiums are irrelevant for properties that hold a Class U exemption, a Class E exemption (person moved to care home), or a Class F exemption (unoccupied after death). These statutory exemption classes override any premium. But if a property loses its exemption — for example, because the SMI person has died and Class F has expired — the premium may then apply. Executors handling an estate should be aware of the timeline.

2026/27 Benefit Rates

The qualifying benefits for SMI have been uprated for 2026/27:

• Attendance Allowance: lower rate £76.70/week, higher rate £114.60/week
• PIP daily living: standard £76.70/week, enhanced £114.60/week
• UC LCWRA element: £416.19/month

The rates do not affect eligibility — any rate of Attendance Allowance or PIP daily living qualifies (except DLA care, which must be the middle or highest rate). But knowing the current rates helps when checking award notices and verifying that the right benefit is in payment.

Scottish Benefit Transfers

If someone has relocated from Scotland to England, they may hold Scottish devolved disability benefits — Adult Disability Payment (ADP) or Pension Age Disability Payment (PADP) — rather than PIP or Attendance Allowance. English councils apply English council tax legislation, but in practice they recognise these Scottish benefits where the awards correspond to PIP or AA entitlements. Provide the Social Security Scotland award letter alongside the SMI claim.

What to Do Now

If you already have an SMI discount in place, verify that the benefit evidence on file is current — particularly if the qualifying benefit was ESA and migration to UC has occurred. If you have not yet claimed, the process is the same as previous years: get the GP certificate (free of charge), gather the benefit award letter, and submit the council's SMI form.

Backdating remains available with no statutory time limit. If the conditions were met in a previous tax year and you have not claimed, the overpaid council tax is recoverable.

Our SMI Council Tax Exemption Guide is kept current for the 2026/27 tax year and covers the full claim and backdating process with evidence checklists, household worksheets, and appeal templates.

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