Blog / Car tax when selling

Tax · 4 min read

What Happens to Car Tax When You Sell a Car?

It used to be possible to sell a car with its tax intact, letting the new owner benefit from whatever months were left. That changed in October 2014, and the current system catches out sellers and buyers in different ways if they're not expecting it.

The rule since 2014

Vehicle tax is tied to the registered keeper, not the vehicle itself. The moment the DVLA is notified of a change of ownership, the tax is automatically cancelled, regardless of how many months were paid for and remaining. There's no way to transfer it to the new owner, and no way for the buyer to "inherit" months the seller already paid for.

What the seller gets back

Once the DVLA processes the change of keeper, the seller automatically receives a refund for every full calendar month of tax remaining, sent as a cheque to the name and address on the V5C. Partial months aren't refunded, which means the exact date the sale is notified can matter: notifying a few days earlier or later can shift which month counts as the last full one.

What the buyer needs to do

Because tax cancels automatically on transfer, every used car is effectively untaxed the moment you take ownership, no matter what the seller tells you about "months left on it." The buyer has to tax the vehicle fresh in their own name before driving it anywhere, using the reference number from the new keeper supplement (V5C/2) or the full V5C. This can be done online or at a Post Office and takes effect immediately, but it has to happen before the car moves, not after.

A common misunderstanding worth clearing up

Sellers sometimes advertise a car as "taxed until [month]" as a selling point, which was accurate under the old system but isn't really relevant anymore, since that tax cancels the moment the sale is registered regardless. It's not dishonest, just outdated information repeated from before the 2014 change, but it's worth knowing it doesn't actually transfer any benefit to you as the buyer.

If you're scrapping, exporting, or declaring SORN instead

The same automatic refund principle applies to scrapping a car at an authorised treatment facility, exporting it for 12 months or more, or declaring it SORN, covered in more detail in our SORN guide. In every case, the trigger for the refund is notifying the DVLA promptly, since the calculation runs from the date they actually receive that notification.