Car tax when you buy a used car

The tax does not come with the car

This is the single most misunderstood part of buying a used car, and it has been the position since the paper tax disc was abolished. GOV.UK states it plainly: the tax is not transferred to you when you buy the vehicle, and you must tax a vehicle you have bought before you drive it, or declare it off the road with a SORN.

So the remaining months showing on the seller's record are not yours. The moment the seller notifies DVLA of the sale, the car's tax is cancelled and it is an untaxed vehicle sitting on the road until you tax it in your own name.

It does not matter that the seller paid until December. It does not matter that the DVLA enquiry showed tax valid for another five months when you looked at the advert this morning. It does not matter that you are only driving it two streets. From the point the sale is notified, the vehicle is untaxed.

What the seller gets, and why they want to notify quickly

When the seller tells DVLA the vehicle has been sold, DVLA cancels the tax and automatically issues a refund cheque for any full months left. The cheque goes to the name and address on the log book, and GOV.UK tells sellers to get in touch if it has not arrived after eight weeks. A Direct Debit is cancelled automatically.

Two details in that paragraph create the friction buyers run into. The refund covers full months only, so a sale on the 2nd of the month quietly costs the seller most of that month. And because the refund is automatic and the seller wants it, the seller has every incentive to notify the sale immediately, which is exactly the moment your car becomes untaxed.

The result is the small piece of theatre that plays out on driveways every weekend: the seller wants to notify before you leave, and you need to tax the car before you drive it. Both of you are right, and the order that works is that you tax it first, on your phone, while you are both standing there.

How to tax it before you drive away

You can tax a vehicle online, by phone on 0300 123 4321, or at a Post Office that deals with vehicle tax. To do it you need one of three references: the number from a recent tax reminder or last chance warning letter, the number from a log book in your own name, or the green new keeper slip from the log book if you have just bought the vehicle. That last one is the one that applies to you at the kerbside, which is why the slip matters more than any other piece of paper in the transaction.

Insurance and, where the vehicle needs one, a valid MOT have to be in place. GOV.UK notes that you might also need to show evidence of an MOT, and that it must be valid when the tax starts. Practically, that means three things have to line up before you turn a wheel: insurance covering you to drive that vehicle, a current MOT, and tax in your name.

Direct Debit is available online and at a Post Office but cannot be set up over the phone. And a vehicle that pays nothing still has to be taxed: GOV.UK is explicit that you must tax your vehicle even if you do not have to pay anything because it is exempt.

If the seller has not got a log book at all, you cannot use a new keeper slip, because there is not one. GOV.UK advises against buying a vehicle without a V5C. Registering it in your name with form V62 costs £25 and takes time you will spend not driving the car.

• Tax online, by phone on 0300 123 4321, or at a Post Office.
• Use the green new keeper slip the seller gives you at the point of sale.
• Insurance and a valid MOT need to be in place, and the MOT must be valid when the tax starts.
• Direct Debit works online and at a Post Office, not by phone.
• Even a nil rate vehicle has to be taxed.

What it will cost you, from 1 April 2026

Which rate applies depends on when the car was first registered, and the DVLA vehicle enquiry gives you that date free before you buy.

For a car first registered on or after 1 April 2017, the first year rate is set by CO2 and is paid by the first registered keeper, so as a used buyer you pay the standard rate. From 1 April 2026 that standard twelve month rate is £200. A zero emission car's first year rate is £10, again payable by the first keeper rather than by you.

On top of that there is an additional rate for expensive cars: an extra £440 a year where the list price when new was over £40,000, or over £50,000 for an electric car. It is payable for five years, counted from the second time the vehicle is taxed, and it does not apply to a zero emission vehicle registered before 1 April 2025. This is the figure that catches used buyers, because a three year old car with a high list price when new carries a supplement that has nothing to do with what you paid for it.

Cars registered between 1 March 2001 and 31 March 2017 sit in the lettered CO2 bands, and cars registered before 1 March 2001 sit in two engine size bands. Both sets of rates are published in the DVLA rate tables and in the V149 leaflet, which is the document that changes every April.

Some vehicles are exempt but still have to be taxed. The historic vehicle exemption is a rolling forty year rule, and for the current year GOV.UK states that vehicles made before 1 January 1986 are exempt.

• Registered on or after 1 April 2017: standard rate £200 for twelve months from 1 April 2026.
• Additional rate of £440 a year for five years from the second licence, where the list price was over £40,000, or over £50,000 for an electric car.
• Registered 1 March 2001 to 31 March 2017: lettered CO2 bands.
• Registered before 1 March 2001: two engine size bands.
• Made before 1 January 1986: exempt, but you still have to apply.

What happens if you drive it untaxed

Under section 29 of the Vehicle Excise and Registration Act 1994, a person who uses or keeps an unlicensed vehicle is guilty of an offence, and the excise penalty is whichever is greater of level 3 on the standard scale or five times the amount of duty chargeable. Level 3 on the standard scale is £1,000 under section 122 of the Sentencing Act 2020. Where the keeper had declared the vehicle would not be used on a public road, section 29 provides for a higher level.

Section 31A puts a separate offence on the registered keeper of an unlicensed vehicle, which is the mechanism behind the letters that arrive when a car sits untaxed on a driveway rather than being driven.

There is a related trap in insurance. A vehicle kept without insurance and without a SORN exposes the registered keeper to a fixed penalty of £100 and, in court, a fine of up to £1,000, along with the possibility of the vehicle being clamped, seized or destroyed.

None of these are theoretical for a used buyer, because the gap between paying the seller and taxing the car is exactly where they bite. Close the gap on the driveway, not on the way home.