How to cancel road tax and get a refund

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 but is on the road, 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 road tax refund from the DVLA (Driver and Vehicle Licensing Agency) if you’ve already paid any of it in advance.

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 cancel road tax 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. You can cancel your road tax online through the DVLA website.

• 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. You’ll still need the 11-digit reference number from the V5C to use the online service. 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 road tax 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.

Now read our guide to the best road tax-free cars to buy.

More on UK car tax...

• UK road tax explained
• How much tax will you pay on your new car?
• Classic car tax exemption
• Company-car tax explained
• Electric company car tax explained
• Double cab pick-up tax explained
• How to SORN a car