Road Tax- Pay Monthly or Upfront ?

kopper

I just received my annual car tax notice of £290 (car over 10 years old) and now have the option of paying for 12 months, 6 months or monthly Direct Debit (£304.50 total).

I plan to sell the vehicle in the coming year, so it is better to pay by monthly DD and cancel it when i sell it?
The other option is to pay for 12 months and ask for a refund from DVLA when i do sell it but that sounds like too much hassle.

Thanks

facade

Upto you. I don't trust the DVLA, so no way do they get a Direct Debit out of me.

Cheapest is to pay 12 months up front, then when you sell it, you will be automatically sent a cheque for the remaining unused months, pro-rata.
(If you get 6 months, you are charged a 10% levy, that you won't get back)

tim9966

I'd pay up front. You don't have to ask them for a refund any more, so there is no hassle. It's done as soon as you as you send your V5 back to say you have sold to the car to someone else or a dealer.


My cheque took 2 weeks to arrive after I sold my car.

AdrianC

The APR on the DD options works out high. If you can fund it up front, do so.

Marvel1

I pay mine upfront for the year, every month I put money away for it, it's the cheapest option.

avtur

The additional charge for DD payment is 5%, yes it is a charge but in real terms I don't think this is excessive.

avtur

kopper wrote: »

I just received my annual car tax notice of £290 (car over 10 years old) and now have the option of paying for 12 months, 6 months or monthly Direct Debit (£304.50 total).

I plan to sell the vehicle in the coming year, so it is better to pay by monthly DD and cancel it when i sell it?
The other option is to pay for 12 months and ask for a refund from DVLA when i do sell it but that sounds like too much hassle.

Thanks

You don't have to request a refund, it will happen automatically when you submit the sale section of the V5.

You will only be refunded for complete months remaining, so the refund you receive would be the same if you sold on say the 2nd or 3rd of the month as it would be if you sold on the 28th, 29th of the month, of course you may not have much say in this, it all depends on who turns up to buy and when!

The direct debit payment attracts an additional premium of 5% (reflected in the £304.50), which compared with other deferred payment methods isn't too bad; you will be paying £14.50 (for the year) for the convenience of paying by direct debit. If you sell at six months into the tax year then that will only cost you £7.25 ... depending on your circumstances, that may well be an acceptable cost to you.

The automatic refund of car tax when selling is designed to be an incentive that will encourage people to notify the DVLA as soon as possible when a sale has taken place. If you delay in declaring the sale to DVLA then the refund of tax reduces.