Premium car tax hack
Discussion
I was thinking about premium car tax, which is a great annoyance to me. It occurred to me that if it is paid for 5 years from the second time the tax is paid, why not buy a new car, cancel the tax after a month, then retax it the following month. It would kill the dreaded premium tax 11 months early, is that correct?
It’s not a straight 5 year ownership from new though it’s from the second tax date isn’t it but you also can’t just cancel the tax month in month one just because you want to without specific reason ie you’ve sold it and then re tax it just because you then want to I don’t believe.
Good try but I think HMRC and DVLA might be slightly ahead of you.
Good try but I think HMRC and DVLA might be slightly ahead of you.
alscar said:
It s not a straight 5 year ownership from new though it s from the second tax date isn t it but you also can t just cancel the tax month in month one just because you want to without specific reason ie you ve sold it and then re tax it just because you then want to I don t believe.
Good try but I think HMRC and DVLA might be slightly ahead of you.
You can declare it sorn whenever you want and then relax it.Good try but I think HMRC and DVLA might be slightly ahead of you.
Its what I plan to do when my car hits 6 years old as ill be part way through a car tax year.
lornemalvo said:
I was thinking about premium car tax, which is a great annoyance to me. It occurred to me that if it is paid for 5 years from the second time the tax is paid, why not buy a new car, cancel the tax after a month, then retax it the following month. It would kill the dreaded premium tax 11 months early, is that correct?
Don't you end up paying more with that approach?Essentially, you start paying the year 6 (lower tax) 11 months early, but you would still have paid the same amount of higher tax in years 1 - 5, as you would have anyway.
You're not saving anything, and are actually bringing forward the year 6 tax date, so you are paying it earlier than you otherwise would have.
Mandat said:
Don't you end up paying more with that approach?
Essentially, you start paying the year 6 (lower tax) 11 months early, but you would still have paid the same amount of higher tax in years 1 - 5, as you would have anyway.
You're not saving anything, and are actually bringing forward the year 6 tax date, so you are paying it earlier than you otherwise would have.
I would have thought so.Essentially, you start paying the year 6 (lower tax) 11 months early, but you would still have paid the same amount of higher tax in years 1 - 5, as you would have anyway.
You're not saving anything, and are actually bringing forward the year 6 tax date, so you are paying it earlier than you otherwise would have.
It works as the second owner, first one pays 2.5 years, you then pay for another 4 but cancel it half way through the 4th year.
KenC said:
No, because tte refund includes 11 months off the premium rate.
Not really.The higher rate of tax ends on the 6th anniversary of the date of first registration.
The first year tax is built into the OTR price paid to the dealer and the first year tax is not refundable. Therefore doing what the OP has suggested won't see any savings, and will actually cost more, because you'll have lost the 11 months of tax in year one, by starting to pay the second year tax 11 months early.
Mandat said:
KenC said:
No, because tte refund includes 11 months off the premium rate.
Not really.The higher rate of tax ends on the 6th anniversary of the date of first registration.
The first year tax is built into the OTR price paid to the dealer and the first year tax is not refundable. Therefore doing what the OP has suggested won't see any savings, and will actually cost more, because you'll have lost the 11 months of tax in year one, by starting to pay the second year tax 11 months early.
KenC said:
That is incorrect. The refund of the first year tax is based upon the rate for the second year so includes the luxury car tax element. I have done this.
How do you get around the fact that the luxury tax band has a defined end date before the lower rate takes effect?You can obviously SORN the car for a year to avoid paying that year's tax, but that is not the scenario put forward by the OP.
Mandat said:
KenC said:
That is incorrect. The refund of the first year tax is based upon the rate for the second year so includes the luxury car tax element. I have done this.
How do you get around the fact that the luxury tax band has a defined end date before the lower rate takes effect?You can obviously SORN the car for a year to avoid paying that year's tax, but that is not the scenario put forward by the OP.
KenC said:
It doesn't have a defined end date.The luxury car taxed is paid for 5 years from the second time it is taxed. In the scenario being discussed the second time the car is taxed is the start of the second month following registration.
The defined end date is real, and is printed on the V5.It is 6 years from the date of first registration.
Paying the year 2 tax in month 2 of year 1 does not alter the end date.
Mandat said:
The defined end date is real, and is printed on the V5.
It is 6 years from the date of first registration.
Paying the year 2 tax in month 2 of year 1 does not alter the end date.
https://www.gov.uk/vehicle-tax-rate-tables.It is 6 years from the date of first registration.
Paying the year 2 tax in month 2 of year 1 does not alter the end date.
"You only have to pay this rate for 5 years (from the second time the vehicle is taxed)."
KenC said:
https://www.gov.uk/vehicle-tax-rate-tables.
"You only have to pay this rate for 5 years (from the second time the vehicle is taxed)."
Thanks for the link. I can see how you've come to be misled. "You only have to pay this rate for 5 years (from the second time the vehicle is taxed)."
The information on that page assumes that the car will be taxed continuously, and does not specifically mention that a defined end date applies if the car is not taxed in the normal 12 month intervals.
KenC said:
That is incorrect. The refund of the first year tax is based upon the rate for the second year so includes the luxury car tax element. I have done this.
It is based on the lower of the first or second years tax rate. so if the first year is lower than the second year it will be based on the first year rate.If the second year is lower than the first year it will be based on the second year.
According to the Gvt website anyway and they should know.
Monkeylegend said:
KenC said:
That is incorrect. The refund of the first year tax is based upon the rate for the second year so includes the luxury car tax element. I have done this.
It is based on the lower of the first or second years tax rate. so if the first year is lower than the second year it will be based on the first year rate.If the second year is lower than the first year it will be based on the second year.
According to the Gvt website anyway and they should know.
Edited by KenC on Monday 10th August 20:03
Edited by KenC on Monday 10th August 20:13
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