CAR TAX REFUND

A car tax refund is the amount an individual gets back on any Road Tax that has been already paid. An individual can only get a refund on the entire month and not partial months; hence it is imperative to time the refund. An individual can get a refund for a number of reasons such as:

• Sell or transfer a car – An individual is expected to inform the Driver and Vehicle Licensing Agency (DVLA) that he / she has sold the car as soon as possible. An individual may be fined if there is a delay in informing about the fine. Once the DVLA is informed, an individual will receive a cheque by post within six weeks and if in case of a Direct Debit, it will be cancelled automatically. The DVLA can be informed about the sale or transfer of the car online at gov.uk.
• Taken a Statutory Off Road Notification (SORN) – Any remaining months will be refunded back to the individual by cheque within six weeks by the DVLA. An individual only can apply for SORN if the car is off the roads and parked in a private driveway, garage or land. This cannot apply if the car is parked on a public road even if it’s not being driven. An individual can apply for a SORN by logging online at gov.uk.
• If the car is scrapped – If an individual decided to scrap his / her car (sob) then they need to take it to an ‘authorised treatment facility’ or a scrap-yard. The individual will have to give the scrap-yard their logbook (V5C certificate) and make sure to keep the yellow part of it, V5C/3. He / she can tell the DVLA that the vehicle has been sold to the motor trade. The individual will receive confirmation and a refund. Please make sure to follow all the directives on the government website as delays can affect the amount of refund an individual will receive.
• Exported the car – If an individual decides to move from the home country to a different location for more than 12 months and also takes the car with him / her, they need to tell the DVLA by filling in part 4 of the V5C logbook. This filled logbook should be sent to the address on the V5C form along with the details of where the refund check should be sent. If an individual plans to go off for less than 12 months, the car still remains subject to the UK law which means the applicable tax on the car will have to be paid.
• Made amendments to the car so that it falls in a different tax band – If an individual has made amendments (such as change the engine size or fuel type) that increase or decrease the amount of car tax that needs to paid, then they need to use a V70 form. The individual will also need to enclose written evidence showing what changes have been made to the car. If any refund is applicable, it will be posted within six weeks. The V70 form is applicable only if the car tax is not due to run out.

When an individual gets a refund

If an individual is expecting a cheque

HM Revenue and Customs (HMRC) will more often than not send the individual cheque or payable order inside 5 weeks; however it may take longer in some cases

If an individual is expecting the payment into his / her bank account

In such a scenario, an individual will receive the payment in 3-5 working days. As a practice, HMRC will only pay reimbursements into UK bank accounts.

An individual should wait 5 weeks after making an online claim and 6 weeks after making a postal claim before contacting HMRC about the payment.

New development

According to the UK Spring Budget 2017, VED rates for cars, motorcycles, and vans registered before 1 April 2017 will increase by RPI. Heavy goods vehicles (HGV) and road user levy rates will be seized in 2017-18. The UK government plans to update the existing HGV rates to incentivise the use of roads and improve air quality. Potential measures to incentivise competent use of roads could increase revenue for HM Treasury.

Summary

An individual can cancel the car tax by informing DVLA that the car is off the road and the refund will be processed for any full months of remaining tax. To cancel the vehicle tax an individual will have to tell DVLA that the car has been:

• sold or transferred to someone else
• taken off the road, for example kept it in a garage – this is referred to as Statutory Off Road Notification (SORN)
• written off by the insurance company
• scrapped at a vehicle scrap-yard
• stolen and the refund can be applied separately
• sent abroad (out of the UK)
• registered as exempt for vehicle tax purpose

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.