Vehicle tax: what happens when the vehicle is sold?

Every vehicle in the UK must have a valid road tax certificate to be legally allowed to drive on public roads. The tax is officially called Vehicle Excise Duty – and it’s an annual charge you pay through this DVLA website. Remember, it’s the driver’s responsibility to keep the payments up to date. Failure to pay your road tax can result in a hefty fine.

Some vehicles, such as pure-electric cars or historic vehicles built before 1982, are exempt from paying road tax. However, you still need to register your car with the government to be legally allowed to drive it on the road. The form-filling process is the same for a vehicle that’s charged for road tax – the only difference is you won’t need to hand over any money.

There are two ways you can pay your road tax. The most common method these days is to use the DVLA website, linked above. The online form will ask you for some details from your car’s Vehicle Registration Certificate (also known as a V5C or logbook) and a reference number from your vehicle tax reminder letter, which you should receive through the post when your tax is about to expire.

The old-fashioned method is to visit your local Post Office with your car’s logbook, a valid MOT certificate and some money, then ask the cashier to sort the process out for you. Unlike the old days, though, you don’t get a physical tax disc to display on your windscreen. Instead, police officers check your tax using automatic numberplate recognition cameras that are linked to the DVLA database.

What happens to my road tax if I sell my car?

Because we no longer use tax discs, vehicle tax now stays with the owner rather than the car. That means it is non-transferrable between owners and, if you sell your vehicle, you must inform the DVLA of its new keeper and cancel any remaining road tax you have on the vehicle. Thankfully, you’ll get a refund from the government for any full months of road tax you’ve paid for.

Be warned, though. Because the government will only refund full months of road tax, selling your car at the wrong time can leave you slightly out of pocket. For example, if you sell your car on the 2nd

of March, you’ll only receive a refund for any road tax you’ve paid after the 1st of April. In that instance, you’d have wasted almost a full month of road tax.

This new non-transferrable road tax system has also removed a bargaining chip for sellers and buyers. Once upon a time, used cars for sale with 10 or 11 months of road tax could command more money than cars with just two or three months. Conversely, buyers looking at cars with just a couple of months of road tax could knock the price down slightly to offset the cost of getting a new disc.

Can I drive away from a purchase without taxing the vehicle?

No. You must tax your new vehicle before you can drive it on the road. You should also make sure that the previous owner has informed the DVLA that they have sold the vehicle. It’s easy to do this process online using a smartphone at the point of sale.

The DVLA stresses that you should never buy a vehicle without seeing the V5C first. You should also insist that you receive the New Keeper Supplement after you hand over the cash. That’s because you need the 12-digit reference number on it to tax the vehicle. Otherwise, you’ll need to wait for up to four weeks for the DVLA to send you a new V5C with your details on it.

How much should I be paying in road tax?

If you’re unsure how much money you should be paying in road tax, use this government table to check. To find the correct figure, you’ll need to know when your vehicle was first registered. If it was registered after March 2001, tax is calculated according to the type of fuel it runs on and how much CO2 it emits. Find these details in your vehicle’s logbook and cross-check them against the table.

For vehicles registered before March 2001, tax is calculated on engine displacement. At the time of writing, any vehicle with an engine smaller than 1,549cc is charged £180 for its annual road tax. Vehicles with engines larger than that need to pay £295.


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