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Originally published March 22nd 2016
If you’re buying or selling a car, you can no longer transfer road tax. So make sure you know exactly how and when to tax your car to avoid getting caught out.
Road tax is the commonly-used name for vehicle excise duty (VED), which is an annual tax that must be paid on all vehicles that are used on public roads. The cost of this tax firstly depends upon when your car was registered and then on either the size of the engine or its CO2 emissions.
Car registered before March 1, 2001 fall into two tax bands - engine siezes above and below 1549cc. Cars registered after March 1, 2001 are split across 13 tax bands (A-M) based upon CO2 emissions in g/km.
These rates will change for cars registered after April 1, 2017.
Cars that cost more than £40,000 will have to pay an annual supplement of £310 per year for five years. The g/km measure quantifies the grams (g) of Carbon Dioxide (CO2) released for every kilometre (km) the car is driven.
The less CO2 released over the same distance, the less fuel is being used.
You can buy road tax for the full year or for six months, though there is a 5% surcharge for a six-month tax disc.
Motorists can also spread the cost of an electronic tax disc by paying in monthly instalments, though again the government levies the 5% surcharge.
DVLA stores all vehicle ownership records electronically and both it and the police now use the electronic vehicle register to check if a vehicle should be on the road.
As a result, drivers no longer need to display a paper tax disc in their windscreen.
If you’re buying a car, you can't carry over any remaining months on the tax disc – and the seller can't give or transfer that ‘unused’ tax to you, whether they want to or not.
In other words, if you buy a car in March that is taxed until August, you cannot continue to use the tax disc that is associated with the car.
Instead, you have to tax it yourself. And here’s the kicker: you’ll have to make the purchase before you can drive the vehicle. There is no grace period.
If the vehicle is already registered in your name, you can use the 11-digit reference number on the log book (or V5C to give it its true title).
If you have only just bought the vehicle and it is not yet registered, you will need the 12-digit reference number on the New Keeper Supplement (V5C/2).
You can buy a tax disc online at GOV.UK or use the automated telephone service 0300 123 4321.
Alternatively, you can visit your nearest Post Office. You will also need a valid MOT and motor insurance. If you buy online the system will check to see if you’ve got everything in place.
A motor trader is still able to tax the vehicle on your behalf.
If you're selling your car, you need to notify the DVLA by returning the relevant portion of the V5C, or risk a fine of £1,000.
If there are any full months outstanding on the road tax, a refund will be processed automatically. So if your tax disc ran until September 1 2015, for example, and you sold the car in the middle of May 2015, you will be entitled to a three-month refund (for June, July and August).
(Clearly this means you won’t get a full refund – something that has irritated many drivers, especially as the new owner has to tax the vehicle from the point they purchase it. Let us know your thoughts below!)
Also bear in mind that surcharges are not refundable. So, if you have paid in instalments or have a six-month tax disc, you could lose out.
Don’t even think about dodging tax as the penalties can be harsh – including a fine of up to £1,000. Remember, too, that ignorance of the rules is no defence.
If you transfer ownership of your car to someone else without actually selling it – if you’ve given the car to your partner or a friend, for instance – you still can’t pass the tax on and will have to still register the transfer of the vehicle with DVLA using the V5C in the same way as if you had sold it.
You’ll automatically get a refund for any remaining full months left on the vehicle tax when ownership was transferred and DVLA will also cancel your direct debit if you were paying monthly.
If you’ve taken ownership of a vehicle transferred to you by someone else, you’ll need to tax the vehicle or make a statutory off-road notification (SORN) from the date it was transferred to you.
In the same way you can’t transfer road tax when you buy, sell or transfer a vehicle, you can’t transfer a SORN either.
So if you buy a car that has been declared as being kept off the road, this SORN can’t be included as part of the sale or passed on to you so you’ll have to tell DVLA the car is off the road by making a SORN. You can do this at GOV.UK or by phone on 0300 123 4321.
Again, don’t even think about dodging tax as the penalties can be harsh – if your vehicle isn’t taxed or it has no SORN it may be clamped and could be hit with a fine of up to £1,000.
And remember, once more, ignorance of the rules is no defence.