Getting a car tax refund

There’s a few different reasons why you might be due a refund from the Driver and Vehicle Licensing Agency (DVLA) on your car tax – for example, if you’re selling your car or taking it off the road. Usually, it's easy to arrange the refund and you’ll get a cheque in the post within eight weeks.

There’s a few different reasons why you might be due a refund from the Driver and Vehicle Licensing Agency (DVLA) on your car tax – for example, if you’re selling your car or taking it off the road. Usually, it's easy to arrange the refund and you’ll get a cheque in the post within eight weeks.

Rebecca Goodman
Insurance expert
6
minute read
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Last Updated 8 AUGUST 2022

What is a car tax refund?

A car tax refund (or road tax refund) is money back on any vehicle excise duty (VED) that you’ve already paid. If, for example, you paid your car tax for the year but you sell your car after only three months, you’ll be able to reclaim most of the tax. 

You can get a DVLA tax refund on full months, not partial months, so apply for your refund as soon as possible to avoid missing out.

Top tip
A car tax refund is always a bonus, but take the time to check it’s genuine before you do anything. Fraudsters love to lure unsuspecting victims with false websites, links and messages, and they often send them out pretending to offer tax refunds.

How do I get a car tax refund? 

Car tax refunds aren’t just handed out (the tax office isn’t that nice!) and there are different procedures for getting a car tax refund, depending on why you’re owed one:

  • You’re selling or transferring your car – it’s easy to get a refund: just tell the DVLA you’ve sold your car. You should do this as soon as possible – if you delay you could be fined. You’ll receive a cheque in the post within eight weeks or if you have a direct debit, it will be cancelled automatically.
  • You’re taking your car off the road – if your car is off the road and parked on a private driveway, land or garage, you can apply for a Statutory Off Road Notification (SORN) from the DVLA. You should get a cheque from the DVLA within eight weeks for any remaining months of car tax you've paid.
  • You’re scrapping your car – there’s a process you need to follow to scrap a car. You’ll need to use an approved facility, manage some simple paperwork and inform the DVLA. Follow the GOV.UK steps for scrapping your vehicle and your car tax refund will happen automatically.
  • You’re exporting your car – if you take your car abroad for less than 12 months, it still needs to be taxed as though it’s in the UK. But if you’re taking it away for over a year, it’s considered a permanent export and you can get a refund on your car tax. You can’t just tell the DVLA online though – you’ll need to send in part of your logbook. Follow the DVLA steps for taking a vehicle out of the UK.
  • You’ve modified your car – some modifications can change your car’s tax band, which can increase or decrease the tax you pay. Whatever the tax situation, you need to tell the DVLA about the change. If you need a refund, there’s an extra form to complete. Follow the Gov.UK steps for changing your car’s tax band.

How to qualify for a DVLA tax refund

To get a VED refund for any tax remaining on your car, you’ll need to fill out a car tax refund application form, giving one of the following reasons for your request: 

  • You’re selling your car or transferring it to a new owner
  • Your car has been declared an insurance write off by your insurance provider
  • Your car has been exported out of the UK
  • Your car has been scrapped
  •  Your car has been stolen
  • Your car is registered as exempt from vehicle road tax
  • Your car has been taken off the road and you’ve registered it as SORN

There are no other circumstances in which you can cancel your road tax and ask for a refund on any remaining months.

How can I get car tax for a new car?

If you’re getting a new car (whether buying new, buying used or transferring ownership), you need to get new car tax. Annoyingly, you can’t transfer the tax from your old car, and you can’t use any tax paid by the car’s former owner.

Your new car must be taxed before you can drive it. You can apply for car tax online, which is quick to do if you have the right reference number. Make sure you get the New Keeper Supplement (V5C/2) paperwork when you buy your car and everything should be straightforward.

You can also apply by phone on 0300 123 4321 or in person at a Post Office.

It’s a bit of added paperwork but this is the way it works, so it’s important to make sure you’re paying the correct tax and are fully insured before you get behind the wheel in your new car.

Can I get a refund on car insurance?

If you’re getting rid of your car, you can usually cancel your car insurance policy and get a car tax refund – although there’s a few hoops to jump through. You probably won’t get the full amount back and will have to pay cancellation fees. Contact your insurance provider or go to their website to find out how.

If you're selling your car or getting a new car, most insurance providers will update your old policy to cover your new car, so you don’t have to pay cancellation fees (although you might still be charged for amending the policy). But this might not always be the cheapest option. 

Take the opportunity to compare car insurance to see if you could get a better deal elsewhere. It’s quick, easy and could save you money.

Frequently asked questions

How do I get a car tax refund if I pay by direct debit?

If you pay by direct debit, contact the DVLA directly and let them know why you’re cancelling your car tax. They’ll automatically cancel your direct debit and send you a cheque refund for any full months left on your road tax. 

If you cancel your direct debit just before your monthly payment is due, the DVLA might still take the payment. If this happens, you should get an automatic refund back into your bank account within 10 working days.

How much road tax refund will I get?

Your refund will be calculated from the date the DVLA gets your information. The amount you’ll get depends on how many months you’ve paid for in advance. You’ll only get a refund for any full months left on your road tax. 

The following will also be deducted from your total refund amount:

  • Any credit card fees
  • The 5% surcharge on some direct debit payments
  • The 10% surcharge on a single six-month payment.

How long does it take to get a car tax refund?

Your car tax refund should arrive within six to eight weeks. 

Contact the DVLA if you haven’t received your cheque after eight weeks.

What if my refund cheque is wrong?

If there’s a mistake on your refund cheque, send it back to the DVLA explaining what the error is. You’ll need to send it to: 

Refund Section
DVLA
Swansea
SA99 1AL

You should receive a replacement cheque within four weeks.

Why did the DVLA reject my application for a car tax refund?

Your car tax refund application is most likely to be rejected if your details are wrong. When filling out your application, your details must match those in your log book exactly.

If you change your name or address, you must tell the DVLA and update your V5C log book, driving licence and VED direct debit (if that’s how you pay your road tax). If not, you could be fined up to £1,000

If you’re a resident of Northern Ireland, you’ll need to update your address at nidirect.gov.uk.

How can I check if a vehicle is taxed?

You can check if a vehicle is taxed or registered as SORN at GOV.UK.

You’ll need the vehicle’s registration number and 11-digit reference number, which can be found in your V5C log book.

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