Car tax refunds when you sell or scrap a car

You get car tax back automatically when DVLA knows you no longer need it. Tell DVLA the car has been sold, scrapped, exported, taken off the road with a SORN or moved into an exempt tax class, and it cancels your tax and sends a refund cheque for every full month left. You do not fill in a separate refund form, except for a stolen car. If you pay by Direct Debit, it is cancelled for you.

There is no other way to cancel vehicle tax. Cancelling a Direct Debit with your bank does not do it: GOV.UK says you then have to tax the vehicle again.

When you get a refund

GOV.UK lists the events that cancel your vehicle tax. You must tell DVLA that the car has been:

• sold or transferred to someone else
• taken off the road and declared SORN (Statutory Off Road Notification)
• written off by your insurance company
• scrapped at a vehicle scrapyard
• stolen (you have to apply for the refund separately)
• exported out of the UK
• registered as exempt from vehicle tax, for example in the historic class

Once DVLA has the information, the tax is cancelled and the refund follows.

How the refund is worked out

You get back any full months of tax left. The count starts from the date DVLA receives your information, not the date on the sale receipt or the date you posted a form.

That has two practical effects:

1. The month you tell DVLA is not refunded, because it is not a full month left.
2. A delay costs you money. If you post the V5C a week after the sale and DVLA gets it in the next calendar month, you lose another month. Telling DVLA online on the day is the simplest way to avoid that.

What is not refunded

Some parts of what you paid never come back:

• any credit card fees
• the 5% surcharge on monthly or 6 monthly Direct Debit payments
• the 10% surcharge on a single 6 month payment

If you sell a nearly new car in its first tax year, the refund is based on whichever is lower: the first tax payment made when the car was registered, or the standard rate that applies from the second payment. So a high first-year rate is not refunded in full.

How the refund arrives

The refund comes as a cheque. It is sent to the name and address on the V5C log book, so make sure the address is up to date before you sell or scrap the car. If you have moved and not told DVLA, the cheque goes to the old address.

GOV.UK says to contact DVLA if the cheque has not arrived after 8 weeks. If the cheque is made out to the wrong name, return it to DVLA's refund section with the correct name, and contact DVLA if the replacement has not arrived after 4 weeks.

If you move a car into the historic tax class, you get any refund due once DVLA has updated the log book. Contact DVLA if it has not arrived within 6 weeks of the new log book.

Direct Debit and refunds

If you pay by Direct Debit, DVLA cancels it when you tell them the car has been sold, scrapped, written off, exported, stolen or SORNed. You do not need to cancel it with your bank.

If you tell DVLA just before a monthly payment is due, the payment may still be taken. In that case DVLA refunds it automatically within 10 working days. See our guide to paying car tax by Direct Debit for the rest of the rules.

What the buyer gets

Nothing from the seller's tax. Car tax does not transfer with the car, so the buyer must tax it in their own name before driving it. The seller's unused months come back to the seller as the refund described above. Our guide does car tax transfer covers the buyer's side.

That is worth knowing when you agree a price. Tax left on a car is not part of what you are buying, so it should not be added to the price. If a seller argues that the car "comes with a year's tax", it does not.

Selling to a dealer or scrapping

When you sell or part-exchange to a motor trader, the trader can tell DVLA online on your behalf, using the 11 digit reference number from the latest V5C. The registered keeper then gets the refund cheque automatically for any full months left. If DVLA is told by post instead, the refund is still worked out from the date DVLA receives the information, so a slow post can cost you a month.

When you scrap a car, use an authorised treatment facility, make sure DVLA is told it has been scrapped, and keep the paperwork. The refund depends on DVLA being told.

Before you sell: a short checklist

• Check the address on the V5C is current, so the cheque reaches you.
• Tell DVLA about the sale online on the day, while the buyer is with you.
• Give the buyer the green new keeper slip.
• If you plan to keep a car off the road, make a SORN rather than letting the tax run out. Our SORN check guide explains the rules.

To see what tax you would pay on your next car, use the car tax calculator.

Frequently asked questions

Do I need to apply for a car tax refund?

No. In most cases the refund is automatic once you tell DVLA the car has been sold, scrapped, exported, SORNed or made exempt. The exception is a stolen car, where you apply for the refund separately.

How long does a car tax refund take?

GOV.UK says to contact DVLA if the cheque has not arrived after 8 weeks. The cheque goes to the name and address on the log book.

Do I get a refund for the month I sold the car?

No. You get back full months only, counted from the date DVLA receives your information. The month in which you tell DVLA is not refunded.

Can the buyer use my remaining tax?

No. Tax does not pass to a new keeper. The buyer must tax the car before driving it, and you get your unused full months back as a refund.

Is the Direct Debit surcharge refunded?

No. The 5% surcharge on monthly or 6 monthly Direct Debit payments is not refunded, and neither is the 10% surcharge on a single 6 month payment or any credit card fee.