With the new system the exisiting tax is void as soon as you fill in the V5 and an automatic claim is made for the old owner to get the remaining tax back This si the current nightmare of buying a car now - you can't use any existing tax to get the vehicle home,

Does anyone know if I can tax the car online first or do I have to wait until the owner surrenders the tax then do it?

When you collect the car the person you are buying from will give you the V5C keeping only the bit they have to send back notifying the DVLA of the fact they have sold it, this triggers the reffund of remaining VED automatically.

On the V5C you will have been given there is a section on the 3rd page that has a reference number that is identical to that on page one but with an extra digit, this is the number you need to tax the car on-line. The MOT and presumably insurance is checked before they acept your money.

How do i know this, did it in early October, it worked just like it should.

If you don't tax it or insure it before you drive it you are breaking the law.