How to cancel vehicle tax and reclaim any that’s not been used

Anyone who was driving before 2014 may turn misty-eyed at memories of tax discs. Brightly coloured pieces of paper used to be displayed in the windscreen, to prove a driver had paid vehicle tax.

In addition to serving as a quick and simple visual reminder that car tax needed to be renewed, it let authorities easily check whether Vehicle Excise Duty (VED) had been paid. And there was another benefit to it. Anyone selling a used motor could charge for the remaining car tax that was to be enjoyed by the new owner. Alternatively, drivers buying a second-hand car could use the need for new tax to haggle down the price of the car.

In the digital age, that’s no longer the case. Anyone that sells their car and has outstanding VED on it should reclaim the amount paid from the Driver and Vehicle Licensing Agency (DVLA). For the same reason, those buying a new or used car must tax it before they can legally drive away.

But it’s not only when drivers sell their car that they can reclaim tax. If a motor is being taken off the road, scrapped, declared a write-off by an insurance company, or stolen the tax can be reclaimed. Here’s how.

How much car tax can be refunded?

There are three ways drivers can pay car tax. The first is to pay for 12 months up front. Alternatively pay for six months up front, via a direct debit. The third way is to pay on a monthly basis, also using a direct debit.

Those who paid for the full year, and have a number of months remaining when they come to sell their car, will be refunded for all complete months from the date that the notification of sale is received by the DVLA.

Drivers who paid for six months tax will be refunded for any outstanding full months from the date that the notification of sale is received by the DVLA.

The monthly direct debit will be stopped as soon as notification is received. But you won’t receive any refund. Instead the final payment to be processed will be for the month in which notification was received.

It’s important to remember that there is a five per cent surcharge when paying monthly or every six months. This fee will not be refunded. The fee doesn’t apply when you pay annually.

Reclaiming vehicle tax when selling a car

To reclaim all outstanding vehicle tax when selling a car, it’s important to act promptly. Every day you delay means you risk straying into the next month and losing more of your money.

The quickest way to do this is online. The DVLA has a simple service for drivers to report when they’ve sold, transferred or bought a vehicle. For sellers, this helps determine whether you have sold the car to a motor trader or private individual.

It will ask for the 11-digit reference number from the vehicle log book, called the V5C. At the same time, the seller should give the buyer the ‘new keeper’s details’ slip, known as V5C/2 part of the log book.

An email and letter will be sent confirming that you are no longer registered as keeper of the vehicle. Then a refund cheque for any full months left on your tax will be sent out. Any direct debit will be cancelled automatically.

If you have lost the V5C, the DVLA will accept a letter. This should give your details, the vehicle registration number, make and model of car, date of sale and the name and address of the new keeper.

Reclaiming car tax when transferring or scrapping your motor

When you transfer a car to a new keeper, or scrap it, some of the steps detailed above for selling a car apply.

The former owner should hand the ‘new keeper’s details’ slip (V5C/2) to the person taking on the car. The DVLA will require the former owner to provide the vehicle registration and the 11-digit V5C document reference number.

Once notification is supplied, any remaining complete months of road tax will be refunded.

If scrapping the car, the scrapyard or insurance company will be named as the ‘trader’ that you’ve ‘sold’ the vehicle to. That’s the case even if you didn’t get any money for it. Again, the DVLA will require the vehicle registration and 11-digit V5C document reference number. The scrapyard or insurer should fill out section V5C/3 of the log book and send it to the DVLA.

Reclaiming car tax for a vehicle that’s off the road (SORN)

A Statutory Off Road Notice (SORN) is used by thousands of drivers who no longer wish to drive their car on the public road. It’s popular with owners of classic or collectible cars.

Go to the DVLA’s dedicated SORN service. Then provide the 16-digit reference from the V11 reminder that is sent to tell drivers their tax needs renewing. If you don’t have one of these, then you can use the V5C reference number for existing keepers, or the new keeper reference number from the V5C/2.

Alternatively, you can send a V890 form to the DVLA, or phone them to declare the car SORN.

Once notification is supplied, any remaining complete months of road tax will be refunded.