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News Article

Change in car tax costs car owners £38 million

Published 16 May 2015 by

Rules brought in October changed the way we tax our cars – you don’t have to stick a tax disc in your windscreen anymore. But a less well-known change could mean you’ll lose out when you buy or sell a car, and according to the AA, this has already netted the government £38 million.

New car tax rules

In the past, when you sold a car, any car tax still remaining on the vehicle would come packaged with it. This would mean that if you taxed a car on January 1st and sold it on July 1st, the new owner would have another six months before they had to pay anything if the original owner had bought a 12 month tax disc.

Under the new rules, car tax doesn’t pass across when you buy or sell a car. For sellers, you’ll be able to reclaim any months of car tax that you had on the vehicle, but this only works for full months. For buyers, you’ll have to pay to tax it from the first day you own it, meaning there could be days or weeks where the seller has paid to tax it but can’t claim it back and you’re paying to tax it as well.

Scrapping tax disc

With the rule changes, as we mentioned, paper tax discs are no longer necessary and since October, you’ve been able to chuck out your old one, even if it’s not expired yet. When the time comes to renew your car tax, you can just do this online and get a digital one.

However, a lot of drivers don’t know they can get rid of their tax disc, as research in February found that around 70% of drivers still have one in their car. This could mean if you buy a vehicle with a tax disc in the window that still has three or four months of tax left on it, you could easily think you’re still covered until the tax disc runs out. In actual fact, you’ll have to tax it again from the first day you own it, otherwise you could have your car clamped, so make sure you double check if you buy a used car.

Sold with tax remaining

If you’re selling your car, make sure to check if it still has any tax left on it. When you sell it, the DVLA will automatically refund you the months of car tax you didn’t use, but remember – you’ll only get full months back. If you’re over by a day or so, you won’t get that month’s tax back, so try to plan ahead and sell your car before it rolls over to another month if you can.

To make sure you get the refund, you need to check that the vehicle registration certificate is up to date. If you’re selling through a reputable dealer, they’ll probably do this for you but it’s worth a check.

What to check

Like we said above, if you buy a car second-hand, remember that if it’s got a disc in the windscreen, it doesn’t mean it’s still taxed. Make sure you pay for car tax from the first day that the car becomes yours, or else the car tax enforcers could clamp your car!