Getting your road tax back after scrapping a car

Vehicle tax is not transferred with a car and it is not refunded by the yard. It is cancelled by DVLA when they are told the car has gone, and the refund for whatever is left comes from DVLA. It works well as long as you do your part promptly.

What you get back

Once DVLA knows the car has been scrapped, your vehicle tax is cancelled and you get a refund for any full months left on it. The refund is calculated from the date DVLA receives the information, not from the day the car was collected. It comes as a cheque, made out to the name and address on the log book. If you pay by Direct Debit, the Direct Debit is cancelled automatically — do not cancel it at the bank yourself.

Three things are not refunded: any credit card fees you paid, the 5% surcharge on some Direct Debit payments, and the 10% surcharge on a single six-month payment. If you paid for the year up front you get the full months back; if you paid monthly, the payments simply stop.

Telling DVLA

The yard issues the Certificate of Destruction, which is the record that the car has been destroyed. You still have to tell DVLA that you have handed the car over — you can be fined £1,000 if you do not — and that notification is what starts the refund.

Two ways to do it. Online, at GOV.UK's "tell DVLA you've sold, transferred or bought a vehicle" service, choosing the motor trader option and entering the 11-digit reference number from the V5C: it takes two minutes and you get an email confirmation on the spot. Or by post, filling in the yellow "sell, transfer or part-exchange your vehicle to the motor trade" section (V5C/3) with the yard's details and sending it to DVLA. Either way, a letter follows confirming you are no longer the keeper. Keep it.

If you tell them online, destroy the yellow section rather than posting it as well. The rest of the log book goes to the collector.

Why the day matters

Refunds are for full months. A car collected on the 28th and reported to DVLA on the 2nd loses a month compared with one reported the same afternoon. There is no pro-rata for days. So do the online notification the day the car goes — you need the 11-digit number, so write it down before you hand the log book over.

If the car was already declared SORN there is no tax to refund; nothing to do. If it was untaxed and not SORN, telling DVLA it has been scrapped closes the record and ends the question.

How long it takes

Contact DVLA if you have not got your refund cheque after 8 weeks. If you cancelled a Direct Debit just before a monthly payment was due, DVLA may still take the payment; that is refunded automatically within 10 working days.

The usual reason a cheque does not arrive is that it went to the address on the log book and you have moved. There is no way to change the address on a car that has been scrapped, so ring DVLA and explain.

Insurance is separate

Nobody tells your insurer. Ring them once the car has gone; most policies refund the unused months less an administration fee, and if you are replacing the car it is usually cheaper to move the policy across than to cancel it. Cancel any breakdown cover attached to the car at the same time.

The order of things

Book the collection, get the price, hand the car and the log book over, be paid by bank transfer, tell DVLA online that afternoon, ring the insurer, wait for the certificate and the cheque. Ten minutes of admin, and the car costs you nothing from that day on.