How to Untax a Car When Selling it? (2026 Update)

Selling your car? You should know that your road tax doesn’t transfer to the new owner. Similarly, failing to notify the DVLA could leave you liable for fines, penalties, and future tax charges. Here’s exactly how untaxing works when selling a car.

So let’s get into it…

Key Takeaways: Untaxing a Car

• Untaxing a car means cancelling your Vehicle Excise Duty.
• The DVLA cancels vehicle tax automatically once notified of the change of keeper.
• The fastest route is the online service.
• Refunds cover only full unused months and are usually issued within six weeks.
• Failing to notify the sale to the DVLA can lead to an automatic Late Licensing Penalty, a possible court fine of up to £1,000, and the risk of the car being clamped or impounded.

What Does It Mean to Untax a Car?

Untaxing a car simply means cancelling your Vehicle Excise Duty (VED). In the UK, every car must either be taxed or declared SORN (Statutory Off Road Notification). You can’t just stop paying car tax while it is registered for being on the road. 

Untaxing is the formal process of telling the DVLA that:

“I am no longer responsible for taxing this vehicle.”

When you untax a car, you’re informing the government that the car is:

• Sold to someone else
• Stored on private land (and therefore not being driven)
• Scrapped or written off
• Exported out of the country

This guide focuses on the first scenario: untaxing when you sell.

How to Untax Your Car When Selling It?

Getting a small set of documents and details ready beforehand makes the process smooth. 

You’ll need:

• The V5C logbook
• The 11-digit reference number from the V5C
• The buyer’s full name and address (for a private sale)

If the V5C is missing, a replacement must be ordered before selling. This costs £25 and takes around five working days when applied for online.

Read this article for more information: Can I Sell My Car Without V5?

According to the DVLA, an estimated 98.7% of vehicles on UK roads are correctly taxed. The remaining minority face increasing enforcement scrutiny, so getting the paperwork right at the point of sale matters.

To untax your car, you’ll need to notify the DVLA, which you can do through three main routes explained below:

The Online Method (Fastest Route)

The official route is via gov.uk/sold-bought-vehicle.

The seller will need the 11-digit reference number printed on the V5C logbook. 

After selecting the relevant option from:

• Sold privately
• Transferred
• Sold to a motor trader

The system processes the change immediately. 

A confirmation email follows shortly afterwards. The service runs from 7 am to 7 pm, seven days a week.

By Post Method

Sellers who may prefer an old-school approach can post the V5C to the DVLA, Swansea, SA99 1BA. Section 2 should be completed for a private buyer, or Section 4 for a motor trader, insurer, or dismantler. The refund still arrives, albeit considerably more slowly than via the online service.

Selling Through a Dealer or Auction

When trading the car in or selling at auction, the dealer or auctioneer can notify the DVLA online once the seller gives the go-ahead. Responsibility for confirming the notification, however, still sits with the seller. It is wise to keep a record of the email confirmation in case anything goes astray later.

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How Untaxing Works When You Sell

Once the DVLA receives notification of the sale, three things happen automatically:

1. The road tax is cancelled from the date the agency processes the notification. 
2. Any remaining full months of unused tax are refunded.
3. If the seller paid by Direct Debit, future payments are stopped.

Partial months are not refunded, however. For example, if a car is sold on the 12th of the month after six and a half months of paid tax, the refund covers the five remaining full months only.

It is worth flagging timing here. The cancellation date is the date the DVLA receives and processes the notification, not the date the car changes hands. Notifying online on the same day as the sale, rather than days later, can mean the difference of a full month’s refund in some cases.

Getting Your Road Tax Refund

The DVLA issues refunds by cheque, posted to the name and address recorded on the V5C. Most arrive within six weeks of the cancellation being processed, though some sellers receive theirs sooner.

A few practical points are worth noting. 

• The refund covers only full unused months. 
• Direct Debit payments are cancelled automatically, with no further action required from the seller. 
• Monthly Direct Debit payers usually do not receive a cash refund, since partial months do not qualify.
• If eight weeks pass without a cheque arriving, the DVLA can be contacted on 0300 790 6802. 
• Cheques issued in the wrong name should be returned with a note showing the correct details, after which a replacement is sent.

Penalties for Getting it Wrong

Failing to notify the DVLA or driving a car without valid tax carries some serious consequences. An automatic Late Licensing Penalty (LLP) of £80 is issued first, reduced to £40 if settled within 28 days. 

The maximum court fine for using or keeping an untaxed vehicle on a public road can reach up to £1,000. Vehicles can also be clamped, with a £100 release fee, or impounded, which costs £200 to release, plus any prosecution costs.

In 2024 alone, the DVLA took enforcement action on 120,000+ vehicles in the Liverpool and West Midlands areas. Automatic Number Plate Recognition (ANPR) cameras and monthly database scans mean an untaxed vehicle is unlikely to stay under the radar for long.

In this context, sellers carry an extra concern. Until the DVLA records the change of keeper, the original owner remains liable for the vehicle on paper. That can include parking fines, speeding penalties, and Late Licensing Penalties triggered after the buyer has taken the car away. 

Therefore, prompt notification is the simplest way to close that exposure.

Common Mistakes to Avoid

A few avoidable slip-ups cause the bulk of the problems sellers face. 

• Leaving the V5C address out of date sends the refund cheque to the wrong place. 
• Cancelling insurance too early leaves the car exposed to theft or damage while it is still legally the seller’s.
• Letting a dealer take the full V5C without confirmation can mean the change of keeper never reaches the DVLA. 
• And, contrary to a stubborn myth, road tax does not transfer to the new owner under any circumstances.

A quick check on the GOV.UK vehicle enquiry service, shortly after the sale, confirms whether the change of keeper has gone through.

Frequently Asked Questions

Can you untax a car before selling it?

Not really, at least not the way most sellers assume. Vehicle tax (officially Vehicle Excise Duty, or VED) stopped being transferable between owners on 1 October 2014. 

Rather than manually cancelling tax in advance, the seller simply notifies the DVLA of the change of keeper, and the tax is cancelled automatically. This rule change was introduced to protect car buyers from unknowingly driving an untaxed vehicle. It also means tax cannot be passed on with the car at the point of sale, however convenient that might once have been.

Can I drive without road tax after selling?

This is one of the most common questions sellers face from buyers. The straightforward answer is no.

The five-day grace period that once existed under the paper tax disc system was scrapped in October 2014. The buyer must tax the vehicle at the point of sale before driving it away on public roads. They can do this online using the 12-digit reference number on the green V5C/2 slip handed over by the seller.

The only exception is driving to a pre-booked MOT appointment. Any other journey on public roads in an untaxed car risks penalties.

Do I get a refund if I pay road tax by monthly Direct Debit?

Future Direct Debit payments stop automatically as soon as the DVLA is notified of the sale. Monthly payers typically do not receive a separate refund cheque, since partial months are not refundable. Direct Debit charges are usually paid month by month rather than in advance.

What if I’ve lost my V5C logbook?

A replacement V5C must be ordered before the sale can be processed. The fee is £25, and online applications usually arrive within five working days. The 11-digit reference can also be taken from a V11 tax reminder, if one is available.

Should I cancel my car insurance before or after selling the car?

Insurance is best kept active until ownership has formally transferred. Cancelling earlier leaves the vehicle exposed to theft or damage while it remains in the seller’s name. Once the DVLA has been notified and the buyer has driven away, the policy can be cancelled or transferred appropriately to a new vehicle.

Can I untax my car without selling it?

Yes. A Statutory Off Road Notification (SORN) declared through the GOV.UK takes the car off the road for tax purposes. The vehicle must then be kept on private land, such as a driveway or garage, rather than on a public road. A SORN also triggers a refund for any full unused months.