Vehicle Excise Duty (VED), known more popularly as car tax or road tax, is a must for all UK motorists. But did you know that when selling, scrapping or stopping use of your car, you can get a tax refund from the DVLA on prepaid months? In this guide, we’ll explain how eligibility works, how to apply for your refund, as well as timelines and expert tips to make getting that money back much easier.

Understanding DVLA car tax refunds

A DVLA tax refund puts cash back in your pocket for any remaining vehicle tax you paid in advance but won't use, like when selling or taking your car off the road. For every full month left, you can claim prorated tax relief. For example, if you have four months of prepaid road tax remaining but you’re only going to use your car for two more months, you can claim back two months' worth of tax.

You can claim a DVLA refund if:

  • You’re selling your car/transferring ownership (be sure to promptly inform DVLA)
  • You’re scrapping the car through an authorised treatment facility
  • You’re going abroad over 12 months (considered exported)
  • Registering Statutory Off Road Notification (SORN)
  • You’re having modifications done to your car that’ll alter the tax rate
  • Writing off, theft, or other permanent loss

Applying for your DVLA car tax refund:

Getting a refund for remaining car tax requires letting the DVLA know your situation. The steps you take to get your refund depend on why you need to end coverage:

  • If selling your vehicle, inform the DVLA of the change in ownership as soon as possible. This notification to the DVLA puts the wheels in motion, and delaying this reporting could result in fines, so don't wait! Once it’s reported, you’ll get a cheque in the post if your car tax is prepaid. If you pay car tax via direct debit, it’ll be cancelled automatically
  • If you plan to park your car off road for the long term, submit a Statutory Off Road Notification (SORN). This pauses tax requirements until you bring the car back onto the roads. Doing this means you’ll be sent a refund cheque for the remaining full months of your prepaid car tax.
  • If you’re scrapping a car, it’s important you follow government guidance and use an approved facility. You’ll then need to fill in some straightforward paperwork and let the DVLA know. Once that’s done, you’ll get your road tax refund automatically.
  • For permanent export, if taking your car abroad over 12 months, you must provide the DVLA certifying documents. You’ll need to submit part of the car’s logbook to prove it's exiting the country long-term to get your tax refund.
  • If you’re modifying your car, certain modifications can alter the car’s tax band. This can either increase or decrease the amount of road tax you’re liable to pay. Regardless, you’ll need to tell the DVLA about it.

As you can see, different situations where you may be eligible for a road tax refund have different processes. However, no matter the road you take for securing that refund, it’s worth having your logbook and V11 tax reminder letter handy to cancel your vehicle insurance.

What happens once you notify the DVLA?

After contacting the DVLA about your situation, they’ll take over handling things from there. If you pay your car tax via direct debit, they'll terminate any outstanding direct debit payments for that vehicle for the remainder of the tax period.

If you pay your road tax in advance, you can expect a refund cheque in the post from the DVLA in roughly six to eight weeks. The total prorated amount should be the remaining full months that you paid for in the tax year but will no longer use the car. The calculation dates back to when your situation began, for example when you sold your car or registered it as off-road .

A few tips for smooth processing: Keep the DVLA up to date if your address changes so your refund cheque reaches you without hassle. Timely status updates also help to avoid any unforeseen issues. And finally, keep your logbook safe as well as the letter confirming your car tax cancellation and refund entitlement. You never know, you may need to refer back to them!

Common DVLA refund issues

Unfortunately, delays sometimes occur with DVLA tax refund processing, especially during seasonal peaks in vehicle transactions. If it’s been over 8 weeks since you notified the DVLA and requested a refund and you still haven’t received it, follow up right away by phone or through DVLA’s online support tools.

Having your specific reference number and as many identifying details as possible speeds queries when checking status. Be ready to provide:

  • Full name and current address
  • Vehicle make, model and registration plate
  • Date and method you originally notified DVLA
  • Any notification receipt number given

This information should allow representatives to investigate and resolve any delays in getting your entitled refund.

Also, beware of stiff penalties over £1,000 for failure to promptly inform the DVLA when taking your car off the road or exporting! Fines apply if you don't officially register SORN status or outbound vehicles. Always keep records of initial notifications to avoid such fines. Keep any confirmation numbers handy too - these prove you completed due diligence if you’re challenged later.

Get expert help

Getting your entitled vehicle tax refund from the DVLA is an important process to complete when the status of your car changes. Be sure to promptly inform the DVLA and follow our guidance to set your refund in motion. For any specific questions on vehicle tax procedures or delays, it's best to contact the DVLA directly. Their online support tools can provide help with your particular case.

Looking to claim a tax refund for work travel expenses and mileage? RIFT Refunds is the place. Recovering owed taxes and expenses related to business, employment and personal tax issues is our specialty. Some advice from our Head of Operations, Ryan Carman: 

Don't leave tax money on the table! You can claim expenses for the last 4 tax years so get in touch with RIFT today and maximise your refund!

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