UK motorists could be losing money on unused road tax if they fail to properly cancel their vehicle excise duty (VED) when selling, scrapping or taking their car off the road, the RAC has warned.
When a vehicle is sold, it's the seller's responsibility to cancel the existing VED, according to new RAC guidance. The Driver and Vehicle Licensing Agency (DVLA) automatically processes a refund for any full months of unused tax - but motorists won't get money back for part-months remaining.
Refunds are typically paid into the account used for Direct Debit payments, or by cheque to the registered keeper's address for annual payments. The RAC stresses that failing to cancel VED when a vehicle is no longer owned or in use can lead to unnecessary payments and complications.
Several situations require VED cancellation: selling a vehicle, exporting it permanently, scrapping it at an Authorised Treatment Facility, or declaring it off the road with a Statutory Off Road Notification (SORN).
The process begins once the DVLA is notified of a change in the vehicle's status. When a car is sold, submitting the new keeper's details triggers the cancellation and refund process for the previous owner. Similarly, declaring a SORN tells the DVLA the vehicle won't be used or parked on public roads, making it eligible for a VED refund.
The RAC says prompt notification to the DVLA is crucial to ensure correct VED management and receive any entitled refunds. The system prevents double taxation and ensures only the current keeper pays the appropriate duty.