A Step by Step Guide About Road Tax Refund
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Paying road tax is routine for every registered keeper in the UK. But the circumstances keep on changing, especially when a person sells a car, scraps and moves your vehicle abroad, then you maybe eligible for a road tax refund. There are many drivers who don’t realise that vehicle excise duty (VED) or vehicle excise duty VED never carries over to the next owner. So, if a person gets unused road tax, then he may get a refund. And the process is quite straightforward contrary to what people think. However, the process becomes more smooth if you have an expert, such as MMBA Accountants experts, by your side.
Let’s break it down in a simple way.
Table of Content:
What Is a Road Tax Refund?
A road tax refund (or car tax refund) is the money that you get as a return for any unused tax that you’ve already paid. Also, one has to make the payment of the vehicle tax in advance. However, when a person cancel road tax, the DVLA calculates full months of unused tax left. And it is not about half months, not days, just the whole months.
And refunds are typically issued by refund cheque. Yes, still a cheque that you need it. Although it appears old school, but that’s how the government does it.
When Can You Claim a Refund?
You may be eligible when:
- You’re selling your car
- The vehicle is stolen
- One has to take your car abroad
- The vehicle is scrapping at an authorised treatment facility
- You declare a Statutory Off Road Notification (SORN)
- The car is exempt from tax
- One doesn’t need to pay when the vehicle is not on public roads
Under any of these circumstances, your tax is cancelled automatically. However, prior information to DVLA is necessary.
How Refunds Are Calculated?
The refund amount is calculated on the basis of the months left in your tax period. For example, if you’ve got six months left, then you get a refund for whichever full six that are remaining. No half month payments and no part payments.
Extra things like credit card fees, direct debit charges, or admin costs aren’t refunded. Because the pay depends on VED only.
How to Apply For It?
The good part about applying is that the DVLA makes it simple. Here’s the quick version:
1. Inform the DVLA
The first thing that you have to them is about the happening; tell them what’s happened, and it includes sale, scrap, export, SORN, etc. When you inform the DVLA, then your tax is cancelled automatically.
2. Keep All the Necessary Paperwork
You’ll need your V5C, your registration number, and sometimes details that your insurance company or insurer provides you
3. Check Your Address
As you know that your refund cheque arrives by post. If the address is wrong, then obviously the cheque goes to the wrong place. Thus, update it online if needed.
4. Receive a Refund
Once the DVLA processes your forms, you simply have to wait. Usually it is a few weeks. The cheque arrives in your name, but you must check it for the correct name.
How It Works With Direct Debit and Future Payments?
If you pay monthly or by direct debit, the DVLA will stop future payments as soon as your tax is cancelled. You don’t need to chase them. Everything pauses automatically.
Special Cases to Know
- If your car is taken abroad in advance, you still need to cancel your VED.
- In case of a stolen vehicle, the DVLA works with your insurance company to verify details.
- While you scrap it, only an authorised treatment facility can handle it.
- For first tax payment, the value of your refund might vary if you make the payment recently
Road Notification and Registered Keeper Rules
Only the registered keeper can claim the refund. Also, you must correctly file the road notification (SORN or sale notice). Because any mistake in the paperwork delays the process.
You add this to your tax return, and HMRC will adjust your money back as a reduction in tax owed or a small refund.
Example of car tax refund
Let’s say you have bought a car, and you use it daily. But for some reason, you intend to sell it; and, you sell your car on the 2nd of the month. For that, you’ve already paid tax until the next year. You get a refund starting from the next month. It is not the current month, but it is just in the rules.
Why One Should Consider Mileage Claims?
One needs to bother with mileage claims because one has spent money. And the system is literally there to reimburse you or reduce the tax you pay.
It’s one of the easiest benefits employees and businesses forget. A few lines on your assessment tax return, and you get real cash back.
And yes, it absolutely helps with rising fuel prices, increasing vehicle wear and tear, and growing travel costs.
Conclusion
A tax refund on your car tax is easy, but as long as you know the system. If you don’t know then, the system becomes complicated. But you have to keep documents ready. Also, you must update the details and inform the DVLA, and let the money come back to you.
Frequently Asked Questions
What happens if my refund cheque has the wrong name?
If you cheque has the wrong name on it, then you must contact DVLA to correct the details before you can get a refund.
How long does it take to receive my vehicle tax refund?
For a vehicle tax refund, it usually arrives within a few weeks. However, delays can occur if your date or address details are incorrect.
Do I still need to pay if I cancel road tax mid-month?
Yes, you still need to pay for the full month. Because, when you cancel road tax, refunds only start from the next month.
How do I follow the step by step guide for getting my tax payment refunded?
The simple step by step guide for getting your tax payment is to notify DVLA, confirm your tax payment details, keep your V5C, and follow the online step by step guide.
Can I get a refund on my first tax payment?
You can receive a refund on your first tax payment if full months remain and your vehicle becomes eligible for a refund.
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