Tips and Advice

How to cancel road tax and get a refund

Sometimes you need to cancel your car tax - we explain how to do it

Road tax (officially called Vehicle Excise Duty, or VED) is just one of the costs associated with car ownership but it’s one of the most important; if your car isn’t taxed, the police can stop you and confiscate your car. There are a few scenarios in which you’ll need to cancel your road tax and in these cases you’ll be able to get a refund on the tax you’ve paid from the DVLA (Driver and Vehicle Licensing Agency).

You can pay road tax annually, every six months or in monthly instalments. You won’t be refunded for tax you’ve paid while running the car but you can stop making direct debit payments once you no longer own it. If you paid your road tax in a lump sum, you’ll be refunded on a pro rata basis.

All you need to know about road tax

Reasons to cancel road tax

You have to have a valid legal reason to stop paying road tax. Here are examples in which you can cancel:

  • If you sell or transfer your car to a dealership or new owner
  • If the car has been written off by your insurance company
  • If the car has been exported out of the country
  • If the car has been stolen
  • If the car has been scrapped
  • If you have taken the car off the road and applied for a SORN (Statutory Off-Road Notification)
  • If the car is now exempt (a classic car of a certain age, for example)

How to cancel road tax

If you want to cancel your road tax payments, you’ll need to have your V5C, which is the pink sheet that’s also known as your car’s logbook. It proves who is the registered keeper of the car and you can’t stop paying road tax without it. The DVLA can issue you a replacement logbook if you’ve lost yours but this normally costs around £25.

Cancelling your tax through the DVLA website is the quickest and easiest way, as there you can inform the agency that you’ve sold or transferred ownership of the car or apply for a SORN, among other things. The website also has instructions on how to cancel road tax payments if the car has been stolen, scrapped or exported.

The DVLA will automatically cancel your direct debit payments, so you don’t need to worry about contacting your bank to do it yourself.

Getting a refund on your car tax

If you’re eligible for a refund, the DVLA will send you a cheque in the post. They take the address from your logbook, so make sure it’s up to date. It can take up to six weeks for them to process your refund and they’ll only refund the actual tax, not any extra charges (credit card charges or the interest incurred by paying in monthly instalments).

You’ll only be refunded for whole calendar months. If you’ve paid for 12 months’ road tax and you sell the car after six and a half months, you’ll get five months refunded.

Read our guides to classic car tax exemption and the best road tax-free cars to buy.

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