Getting a car tax refund

There’s a few different reasons why you might be due a refund from the 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 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
4
minute read
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Posted 30 OCTOBER 2019 Last Updated 19 NOVEMBER 2021

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 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? 

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. Gov.UK sets out the steps for scrapping your vehicle. Follow these steps 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 – 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 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 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 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, so it’s well worth taking the time to seek out a better deal if you can.

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