How to cancel car tax and get a refund
Key takeaways
- New for old car insurance replaces your written-off car with a brand-new equivalent model
- Standard policies usually pay market value, which can be much lower than a new car price
- Strict rules apply, including age, mileage, and ownership limits
- Compare costs with GAP insurance to decide if it’s worth it
When can I get a car tax refund?
A car tax refund is a repayment of unused vehicle excise duty (VED), known informally as car tax or road tax.
A tax refund isn’t transferable to a new owner, so it’s a good idea to try and get a refund immediately. By law, you must let the Driver and Vehicle Licensing Agency (DVLA) know when you no longer own a car. And they must refund any full calendar months of tax that remain on the vehicle.
You also get a tax refund if you get a Statutory Off Road Notification (SORN) for your vehicle. This is when you take your car off the road, and no longer have to pay tax or car insurance.
You can also apply for a refund of any unused months if your car is written-off or stolen.
How do I cancel my car tax and get a refund?
You can cancel your car tax through the GOV.UK website.
Once you tell the DVLA your circumstances have changed, your tax will usually be cancelled automatically. The DVLA then calculates any refund owed for full unused months.
Refunds are normally sent by cheque.
When am I eligible for a road tax refund?
You can usually get a car tax refund if you tell the DVLA your vehicle has been:
- Sold or transferred
- Declared SORN
- Scrapped
- Written-off by your insurer
- Stolen (you need to apply for a refund separately)
- Exported out of the UK
- Registered as exempt from tax
Important: Eligibility starts from the date you notify the DVLA, not when you stopped using the car.
What do I need to cancel my car tax?
The most important document is your V5C logbook. This contains the reference number needed to:
- Declare a SORN online
- Notify the DVLA of a sale, transfer or scrap
If you tell DVLA your vehicle has been written-off, you must supply DVLA with the insurance company’s name and its registered postcode. You can put this information in the ‘provide trader details’ section when you apply online.
You’ll also need to supply the registration number and the 11-digit reference number from the ‘sell, transfer or part-exchange your vehicle to the motor trade’ section of the V5C logbook.
You will be sent an email confirming the details. A letter will also be sent to the address the car’s registered to. You’ll then receive a tax refund by cheque, though you should allow up to 6 weeks for its delivery.
What happens to my road tax when I sell my car?
Car tax does not transfer to the new owner. When you sell your car and inform the DVLA, the VED is cancelled automatically.
The DVLA then refunds you for any full months remaining on your tax. The buyer must tax the car themselves before driving it, even if you only taxed it very recently.
What happens to my road tax if I want to keep my car off the road (SORN)?
If you’re keeping your car off public roads - such as permanently in your garage - you can declare it SORN. This immediately cancels the vehicle’s tax and triggers a refund for any unused full months.
However, the car must be kept entirely on private land, such as a driveway or garage. If it’s parked on a public road while untaxed, you could be fined and face a motoring conviction. It’s common for untaxed vehicles on public roads to be clamped, and eventually towed away.
What happens to my road tax if my car is stolen or written-off?
If your car is stolen, the DVLA will usually issue a refund once they’re notified by the police.
If it’s written-off or scrapped, the refund is triggered when the insurer or authorised treatment facility (ATF) notifies the DVLA. As with other situations, refunds are only issued for full unused months.
How much of a refund on my car tax will I get?
The DVLA only refunds full unused calendar months.
If your tax ends part way through a month, you will not get money back for those remaining days.
How long does it take to get a road tax refund?
Most refunds are issued within 4 to 6 weeks of the DVLA receiving your notification to cancel the tax.
Refunds are usually paid back automatically, either to your bank account or by cheque, depending on how you originally paid.
Can I get a refund if I pay VED by direct debit?
Yes. If you pay by direct debit, the DVLA will automatically cancel it once your car tax is cancelled.
You’ll still receive a refund for any full months remaining by cheque. No further payments will be taken.
What happens to my insurance when I get a VED refund?
Getting a VED refund means your car is no longer taxed. If it’s still kept on a public road, your insurance may no longer be valid, even if you haven’t cancelled it.
You should review your insurance if your car is:
- Declared SORN - You can choose SORN insurance to protect against theft, vandalism, or accidental damage while the car isn’t being driven
- Sold - You should cancel your car insurance
- Written-off - Your car insurance provider will usually cancel the policy automatically
Check your situation carefully to avoid being uninsured or paying for unnecessary cover.
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