Car tax refunds – the ultimate guide

If your circumstances have changed and you no longer need your car tax, you can cancel it and get a refund for any full months you’ve already paid for. Whether you’ve sold your car, taken it off the road, or something else entirely, the process is straightforward once you know the steps.

You can use Motorway’s new tax checker to see when your car tax expires.

Read on to find out how to cancel road tax on a car you no longer drive and get your money back.

Key Takeaways

Non-Transferable: Car tax remains with the seller/vehicle owner and cannot be transferred to a new buyer.

Full Months Only: Refunds are only issued for full remaining months of tax.

Automatic Trigger: You don’t “apply” for a refund; notifying the DVLA that you’ve sold, scrapped, or SORN’d the car triggers the process automatically.

Timeline: Expect a refund cheque via post within 6 weeks of notification.

Direct Debits: These are cancelled automatically by the DVLA once they process your change of status.

Why would I need a refund on car tax?

You qualify for a car tax refund whenever a change in your circumstances means you no longer need to tax your vehicle. That does not always mean getting rid of your car. Major changes to your vehicle or how you use it can also affect the amount due. Here are the main reasons:

You’ve sold your car

Obviously, you don’t want to be paying tax on a car you’ve sold .

You’ve taken your car off the road

Also known as registering your vehicle as SORN (Statutory Off Road Notification) . If you don’t plan to take your car on the road, it doesn’t need to pay road tax.

Your car was written off by your insurance

Written off cars cannot be driven, so you don’t want to be paying car tax on them.

You’ve scrapped your car

Don’t end up paying car tax on a car that no longer exists! Failing to tell the DVLA you’ve scrapped your car can also lead to a £1,000 fine.

You’ve exported your car

If you’re moving abroad then UK road tax will no longer apply to your vehicle.

Your car has been stolen

There is a different process for a car road tax refund following a car theft. This will involve your car insurance company.

Your car is exempt from vehicle tax

Vehicles such as those used by disabled people and electric cars don’t pay road tax .

You’ve modified your car

This can change the car tax band of your vehicle, either increasing or decreasing the amount due.

These are the only circumstances that qualify you for a car tax refund. There is no other way to cancel your vehicle tax, so make sure your situation falls into one of these categories before you begin.

car tax refund for scrapped car — You must let the DVLA know you’ve scrapped your car.

What to know before you apply for a car tax refund

There are a few things to keep in mind when you apply for a refund of car tax, so make sure you don’t waste any time in making your application.

Refunds are paid in full months

That means you can’t get a refund for a portion of a month. For example, if you sell your car midway through a month, that part-month will not be refunded. Your refund is calculated from the date DVLA receives your information, not the date you sold or changed the status of your car, so it pays to act quickly. The refund cheque will be sent to the name and address on your V5C log book, so make sure those details are up to date before you start.

Your refund can take up to six weeks to arrive

Once DVLA receives your information, it can take up to six weeks for your refund cheque to arrive in the post. If you’ve also applied for a SORN, allow an extra four weeks for that confirmation to come through.

Application	Processing time
SORN confirmation	4 weeks
Road tax refund	6 weeks
Other applications by post	6-8 weeks

If your refund cheque has not arrived after eight weeks, contact the DVLA to chase it up.

Changing your tax band requires extra admin

If you are applying for a refund due to a change in your cars tax band, then you will need to inform DVLA of the change before you can apply to get money back. In this case, you’ll need to send in:

Your V5C logbook
Your current MOT certificate
Written proof of the vehicle changes

If the changes require you to pay more tax, you’ll also need to send in a cheque paying any extra tax due. Once the DVLA has registered your changes, you’ll receive a new V5C.

Extra fees won’t be refunded

Remember that any repayment you get for your car tax refund won’t include any credit card fees you had to pay. There are some surcharges that won’t be refunded, either:

The 5% surcharge placed on some direct debit payments
The 10% surcharge on a single six-month payment

First tax payment refunds may be lower than you expect

If you’re claiming a refund on the first year of tax after registering your vehicle, be aware that the amount you get back might be less than you originally paid. The DVLA calculates your refund based on whichever is lower: the first tax payment rate or the standard rate for the second tax payment onwards. For some cars, especially those with higher emissions, the first-year rate is significantly higher, so your refund will not reflect that full amount.

Car tax doesn’t transfer to the new owner

If you are selling your car with plans to buy another one, the tax on either vehicle is based on car ownership — it doesn’t carry on, being able to cover any car you drive. Simply put, your tax payments are closely connected to both you and the exact car you own. Make sure you update the DVLA every time you buy or sell a car and transfer ownership .

SORN car tax refund — If your car will be off-road then you can apply for a road tax refund.

How to cancel your road tax

To cancel your road tax, you need to tell the DVLA about the change to your vehicle’s status, whether you’ve sold it, declared it SORN, scrapped it, or any other qualifying reason. Once DVLA has your information, your vehicle tax will be cancelled and you will automatically receive a refund cheque for any full months remaining. If you pay by direct debit, that will be cancelled at the same time.

In most cases, you can notify DVLA and cancel your car tax online.

You can also post applications to:

Refund Section DVLA Swansea SA99 1AL

This is also the address you should return your refund cheque to if you find your details are incorrect.

If your cheque arrives with the wrong name, return it to the address above with a note explaining the correct name. If a replacement hasn’t arrived within four weeks, contact the DVLA again.

If you pay by direct debit, this will be cancelled automatically.

Your refund cheque will be sent to the name and address on your V5C log book.

If your refund has not arrived after eight weeks, contact the DVLA.

Ready to sell?

Need to sell your car, or want to understand more about documentation or maintenance? Check out more of our guides here, covering everything from the paperwork you need when buying and selling, to various notices you may need to file with the UK’s driver and vehicle licensing agency.

The information provided on this page is for general informational purposes only and should not be considered as professional advice.