How to cancel road tax and get a refund if you sell your car or take it off the road

Cancel Road Tax & Claim Your Car Tax Refund (2025 Guide)

Updated Guide: Cancelling your car’s road tax (Vehicle Excise Duty) and claiming a refund is straightforward once you know the steps. This guide explains how UK vehicle owners can cancel road tax and reclaim any vehicle tax refund they’re owed, whether you’ve sold your car, taken it off the road (declared SORN), or transferred ownership. We’ll walk you through notifying the DVLA, what refunds to expect, and how cancelling DVLA direct debit payments works under the latest 2025 regulations.

When Can You Get a Car Tax Refund?

You’re eligible for a car tax refund when you no longer need to pay vehicle tax on a car. In practice, this means you must inform the DVLA if any of the following situations apply:

You sold or transferred the vehicle to a new owner. (Vehicle tax no longer transfers to the buyer; it’s cancelled instead.)
You declared the car off the road (SORN). For example, you’re keeping it in a garage and not using it on public roads.
The vehicle was written off by your insurer.
The vehicle was scrapped at an authorised scrapyard.
The car was stolen. (In theft cases, you’ll need to report it and apply for a refund separately.)
The vehicle was exported out of the UK permanently.
The vehicle is now exempt from tax. For instance, you’ve registered it as tax-exempt (common for certain disabled drivers or historic vehicles).

If any of the above events occur, you are no longer liable for road tax on that vehicle. You must notify the DVLA of the change in order to cancel the tax. Once the DVLA knows you don’t have to pay VED on that vehicle anymore, they will process a refund for any full months of tax remaining.

Tip: It’s not possible to cancel your vehicle tax for any other reason. If the car is still in use on public roads, you must keep it taxed. Driving an untaxed vehicle on the road is illegal and can result in fines.

How to Cancel Your Road Tax (Step-by-Step)

Cancelling your road tax essentially means informing the DVLA of the change in your vehicle’s status. Here’s how to reclaim car tax step by step:

Prepare your details and documents: Have your vehicle’s registration number and your V5C logbook on hand. You may also use a recent V11 vehicle tax reminder form if available, as it contains reference codes the DVLA might require for certain transactions. Ensuring you’re the registered keeper (with an up-to-date address on the V5C) is important, since refunds are sent to the name and address on that document.
Notify the DVLA of the change: You can do this quickly online or via other channels:
1. Online: The fastest method is to use the official DVLA online service for vehicle transactions. There isn’t a specific “cancel tax” button; instead, you’ll use the relevant service for your situation. For example, use the “Tell DVLA about a sold or transferred vehicle” service if you’ve sold the car, or the “Register your vehicle as off the road (SORN)” service if you’re taking it off road. The online process will guide you through entering the necessary codes from your V5C/V11 and confirming the reason. Once submitted, this automatically triggers the tax cancellation and refund process as part of that notification. By phone: If you prefer, you can call the DVLA vehicle tax service (Telephone: 0300 790 6802) and inform them of the change. Have your V5C details ready when you call. They will process the cancellation over the phone.
1. By post: You can also notify the DVLA by post. This usually involves filling out the relevant section of your V5C logbook and sending it to DVLA, Swansea. For example, if you’ve sold the car, complete and mail the V5C’s section for the new keeper’s details. If you’re declaring SORN by post, you can fill out form V890 (Application to SORN) and mail it. Posting notifications is slower; the cancellation will take effect once DVLA receives and processes your letter.
Wait for DVLA confirmation: After you’ve notified the DVLA, they will update their records. In many cases (especially if done online), you’ll receive an instant confirmation on-screen or an email. If you mail in a logbook or form, you should get a letter back confirming that you’re no longer the registered keeper or that the vehicle is SORN, etc. Keep this confirmation for your records. At this point, your car’s tax is considered cancelled.
Ensure the new owner taxes the car (if applicable): If you sold or transferred the vehicle, remind the new owner that they must tax the car immediately from the date of transfer. The road tax does not carry over to them. It’s now their legal responsibility to tax the vehicle from the date they bought it. (You won’t be penalised if they fail to do so, since you’ve informed the DVLA of the sale, but the new driver could be fined for driving an untaxed vehicle.)

What Happens After You Cancel? (Refund Process and Timing)

Once the DVLA is informed and processes your cancellation, here’s what you can expect:

Vehicle tax is officially cancelled: The DVLA will stop the tax as of the date they receive your notification. If you were paying by Direct Debit, the DVLA will cancel the Direct Debit automatically at this point. You do not need to manually cancel your DVLA direct debit with your bank; future payments will cease once the tax is cancelled. (It’s wise to check your bank statements to be sure no further payments are taken, but in general, no action on your part is required to stop the payments.) Importantly, do not simply cancel the Direct Debit on your own without informing the DVLA of the reason; doing so would leave your vehicle untaxed and could lead to enforcement action, since the DVLA wouldn’t know why you stopped paying.
Refund for remaining months: You will automatically get a refund for any full months of tax you had paid beyond the cancellation date. The refund amount is calculated from the date the DVLA receives your information (not the date you sold the car or sent the letter, but when they officially record it). For example, if you sell your car mid-month, you won’t get credit for that partial month, but you will get refunded for each whole month of tax that was left after the cancellation effective date. (This means if you were paying road tax annually and had several months remaining, those full months will be refunded. If you were paying monthly and cancelled part-way through a month, you likely won’t receive any refund for that month, the DVLA does not refund partial months.)
How refunds are issued: Refunds are paid by cheque from the DVLA, sent via post. The cheque is made out to the name on the vehicle’s logbook and mailed to the address on the logbook. So, make sure your V5C had your correct name and address; if you’ve recently moved and not updated it, the refund cheque may go to your old address. (DVLA cheques cannot be issued electronically or via bank transfer at this time.)
No refunds for fees or surcharges: The DVLA will not refund certain extra charges. This includes any credit card fee you paid when initially taxing the vehicle, the 5% surcharge added to some direct debit instalment plans, or the 10% surcharge if you paid for 6 months rather than 12. Those small fees are non-refundable.
Direct Debit payments timing: If a monthly Direct Debit payment was due around the time you cancelled, the DVLA may still take that payment if the cancellation didn’t process in time. Don’t worry, if an extra payment is taken after your tax should have ended, the DVLA will automatically refund it (usually within 10 working days). Essentially, any overpaid amount for unused months will come back to you. Those who pay monthly generally won’t end up with a large refund, since you pay for road tax in ongoing intervals. The refund process mostly benefits people who paid for the full year (or half-year) in advance or have full months remaining.

How Much Will the Refund Be?

The refund you receive is for all the full months of tax you haven’t used. For instance, if your annual car tax was paid through December and you cancel (notify DVLA) in early September, you’d get a refund for October, November, and December (3 full months) since you won’t be using the vehicle in those months. If you cancel later in September, such that only November and December are completely untouched, you’d get 2 months back, and so on.

Important details about refund calculations:

Cut-off date: The effective date is the day your notice reaches DVLA. You won’t get credit for the month in which you cancel if that month has already started. So it’s often beneficial to notify us as soon as you sell or SORN the car to avoid losing another month’s tax.
First-year rates: If you’re cancelling very early in a new car’s life (within the first year of its first registration), special rules apply. The DVLA will calculate your refund based on whichever is lower of: the amount of tax you originally paid for that first year, or the standard annual rate from the second year onward. (This primarily matters for vehicles that had a higher first-year VED rate; it ensures the refund isn’t higher than what a normal rate would be. In practice, this affects relatively new cars and is a minor technicality.)
Example: Suppose you paid £150 for a year’s tax and six full months remain unused after you cancel. You would get roughly £75 back (since that’s 6/12 of the annual rate). If you pay monthly, you likely won’t see a refund unless you’ve paid beyond the current month, due to the full-month rule.

Receiving the Refund Cheque

After cancellation, the DVLA will issue your refund by cheque and mail it to you. Here’s what to expect:

Timeline: Most refund cheques arrive within around 6 weeks, though the DVLA advises that it can take up to 8 weeks in some cases. This allows time for processing and mailing. It’s often quicker, but if it’s been two months with no sign of your refund, you should follow up.
If the refund doesn’t arrive: If 8 weeks have passed since you notified the DVLA and you still haven’t received your road tax refund, contact the DVLA to inquire. You can reach them by phone, by post, or via the online contact form on the government website. Provide your vehicle details and the date you notified them, and they can investigate the status of your refund.
Cheque issues: The cheque will be made out to the name on the V5C logbook. If you receive the cheque and notice your name is spelt incorrectly or you’ve since changed your name, do not try to cash it. Instead, return the cheque to the DVLA with a note explaining the issue and the correct name. Send it to the DVLA Refund Section, Swansea, SA99 1AL (the address provided for refund queries). The DVLA will reissue the cheque in the correct name. If you don’t get a replacement cheque within about 4 weeks of returning the incorrect one, contact DVLA again to follow up.
New owner’s tax: Remember that any refund you receive is for your unused tax. It doesn’t affect the new owner. The new owner must tax the vehicle anew from the date of purchase; there’s no transfer of the old tax. Your refund cheque coming to you is confirmation that your liability ended, and the vehicle is now untaxed until the new keeper taxes it.

Cancelling a DVLA Direct Debit (Stopping Payments)

If you were paying your car tax by monthly Direct Debit, you do not need to separately cancel the Direct Debit with your bank in most cases. The act of informing the DVLA (about selling, SORN, etc.) will prompt them to cancel any future scheduled payments automatically. Here are a few points to note:

Automatic cancellation: Once your vehicle tax is ended in the DVLA system, they will not take further payments. The Direct Debit mandate for that vehicle’s tax will be terminated on their end. You should see no new charges going forward.
Final payment timing: If a payment was collected around the same time you cancelled (for example, you sold the car on the 1st of the month and the Direct Debit was taken on the 3rd), the DVLA will refund any overpaid amount for the unused period. This refund would typically be included in your overall refund cheque for the remaining tax. According to DVLA guidance, if a Direct Debit payment sneaks through just before cancellation, you’ll be refunded for it automatically (often within 10 working days for the extra payment).
Do not cancel without notifying DVLA: It’s important not to simply cancel the Direct Debit via your bank before telling the DVLA of your situation. If you stop the payments without the DVLA knowing why, your vehicle will appear un-taxed in their system, and you could be flagged for non-payment (since, from their perspective, the car might still be in use). Always go through the proper cancellation process (sale notification, SORN declaration, etc.) first, and then the payments will stop as a result. In short, let DVLA handle the Direct Debit cancellation as part of the refund process.
Double-check your bank: After you’ve received confirmation from DVLA, it doesn’t hurt to monitor your bank account to ensure no further tax payments are taken. If you do see an extra payment after the cancellation date, it should be refunded soon after. If it isn’t, get in touch with DVLA.

By following the steps above, you can cancel your car tax and reclaim any unused tax confidently. The system in 2025 is designed to be user-friendly: once you notify the DVLA, they do the heavy lifting, ending your tax liability, stopping any DVLA direct debits, and sending you a road tax refund for the unused period. Always keep an eye out for the refund cheque and reach out to DVLA if you encounter any issues.