How many cars can you sell in a year without a dealers licence UK? You don’t need a licence to trade in cars at all in England and Wales, you do however require a licence to deal in cars in Scotland. You can apply for a temporary or full licence via your local authority and fees do apply.
But if you intend to flip cars on the side as a side hustle or as a full-time job you need to consider more than licensing. We outline the key areas of legislation that affect you as a motor dealer below.
Setting up a business
Setting up any business in the UK will require you to register as either a sole trader or as a private limited company. You can choose one or the other and we out two below. But do some research and decide which model is best for you.
This is the simplest form of self-employment. You will run the business as an individual and keep any post tax profits.
However, your personal and business assets are not separate. This means you’re personally responsible for debts associated with the business.
A sole trader is just that, you, working for themselves. This is the most common way of operating a small business. To become a sole trader, all you need to do is register as self-employed with HM Revenue & Customs.
Private limited company
A private limited company, is a separate legal entity and is completely separate from the person owning and running it.
The company will have a director (yourself) who is responsible for running the company, and at least one shareholder (again yourself). The company will need to submit its annual accounts to Companies’ House and a tax return to HMRC.
The director will also need to fill in a Self Assessment tax return, but will only pay tax on the money they earned by running the business, not the overall business profits.
You will require the services of an accountant. They can advise on what records you need to keep, VAT registration and help you understand your tax liabilities. Tax’s on a self-employed persons earnings are payed in arrears, typically 1-2 years after the profit has been made.
Technically if you are a sole trader you do not legally need to have a business bank account. But I would advice getting one. It allows you to keep your business and personal finances separate. Makes record keeping easier and makes the business look more professional. If you are a running as a limited company you do need to have a business bank account. But again speaking to an accountant for advice on this is best.
You will need full specialist motor trade and public liability insurance even if you are trading as a side hustle.
The consumer rights act
If you are trading in cars your business will come under the consumer rights act. The act is complicated and nuanced and it is it import that you gain a full understanding of you obligations and your customers right.
Applying for trade plates
If you want to drive unregistered and/or untaxed vehicles which are temporarily in your possession, then you will need to apply for trade licence plates (‘trade plates’) from the DVLA. You are only permitted to drive on trade plates for certain purposes – for example test drives, deliveries, and taking a vehicle to another motor trader’s premises.
Note that trade plates only exempt you from the need to tax a vehicle and they don’t exempt it from MOT testing requirements or the need for insurance. However, by registering your trade plates with the Motor Insurance Database then the relevant authorities will be able to see that you have an appropriate motor trader’s insurance policy in place to cover you.
Trade licence plates are valid for a period of between six and 12 months, after which you’ll need to renew them if you still need them. A fee is due for applications and renewals. You can find out more and apply for trade licence plates on the Gov.uk website.
If you take on a garage with a petrol forecourt you will need a petroleum storage certificate from the local petroleum enforcement authority. In most cases you will require an environmental permit or pollution prevention and control permit. Again contact your local authorities for more information. The use of a waste oil burner is also now regulated.
If you operate in Wales and business premises which produces 500kg or more of hazardous waste in any 12 month period needs to be registered with Natural Resources Wales.
You will be fine if you are selling a few cars for personal used in a year and you there are no limits on the number of cars you can own. But if you are trading in cars and doing so regularly you will need to consider all of the above and more. If you don’t take these steps it will only be a matter of time before the authorities catch up with you.
Find the article helpful? We have written other on Which cars should you buy to flip, How to sell cars on facebook (with tips) and Flipping cars: The Complete Guide.
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