Last Updated on April 18, 2023 by Bernard Juchli
Do you need a license to flip cars UK? Flipping cars has become a lucrative business opportunity in the UK, where individuals buy cars at a low price, fix them up, and sell them at a higher price to earn a profit. In England and Wales, it is not necessary to have a license to flip cars. This can be an excellent opportunity to explore whether flipping cars full-time is a viable business option for you.
Moreover, this publication discusses the countries in the UK that need or don’t need a license to flip cars along with the regulations governing car flipping in the UK.
Do you need a license to flip cars UK?
As mentioned previously, it is not necessary to hold a license to flip cars in England and Wales. However, in Scotland, a license is necessary to deal in cars, and one can apply for a temporary or full license through their local authority, with applicable fees. The misconception that a license is necessary in England and Wales may stem from the licensing requirements in Scotland, as well as similar requirements in some states in the USA.
In Scotland, all second-hand car dealers, including car flippers, are required by local authorities to obtain a license or registration to operate, regardless of their size or method of operation. The only exception is for those businesses where dealing in second-hand goods is incidental to their primary business activity.
In other parts of the UK, some local authorities may require businesses that engage in second-hand dealing as the primary or significant part of their operations to obtain a license or registration. However, certain exemptions generally apply to car dealers, regardless of the age or size of their business.
Also, the requirement to obtain a license to be a dealer may have caused confusion with the requirement to register with the DVLA for trade license plates. If you possess unregistered and/or untaxed vehicles and wish to drive them, you must apply for trade license plates from the DVLA. However, trade plates only exempt you from the need to tax or register a vehicle and not from MOT testing requirements or the need for insurance. To demonstrate appropriate insurance coverage, you should register your trade plates with the Motor Insurance Database.
Trade license plates are usually valid for six to twelve months and require renewal, for which a fee is due. You can learn more about trade license plates and apply for them on the Gov.uk website. It is important to note that you are only authorized to drive on trade plates for specific purposes, such as test drives, deliveries, and transporting a vehicle to another motor trader’s premises.
All in all, you need a license to flip cars in the UK.
Regulations governing car flipping in the UK
To ensure that buyers are protected and that sellers operate within the law, the UK has regulations in place to govern the practice of car flipping.
Consumer Rights Act 2015
The primary legislation governing the sale of goods, including cars, in the UK is the Consumer Rights Act 2015. This law sets out the minimum standards that all cars sold in the UK must meet, and it provides consumers with the right to a refund or repairs if a car is found to be faulty or not as described.
Car flippers must ensure that the cars they sell meet the necessary standards and are described accurately.
Trade Descriptions Act 1968
The Trade Descriptions Act 1968 prohibits false or misleading descriptions of goods, including cars. Car flippers should accurately describe the cars they sell and not mislead buyers about their condition or history.
For instance, in case a car has been in an accident, it is the responsibility of the seller to reveal this information to potential buyers. Failure to do so can result in legal consequences for the seller.
Sale of Goods Act 1979
The Sale of Goods Act 1979 is another piece of legislation that governs the sale of goods in the UK, including cars. This law sets out the implied terms that are automatically included in all contracts for the sale of goods. Car flippers should ensure that the cars they sell meet these requirements.
Road Traffic Act 1968
The Road Traffic Act 1988 is the primary legislation governing the use of motor vehicles on public roads in the UK. Car flippers must ensure that the cars they sell are roadworthy and meet the requirements of this law, such as being properly registered, insured, and having a valid MOT certificate.
Consumer Protection from Unfair Trading Regulations 2008
The Consumer Protection from Unfair Trading Regulations 2008 prohibits unfair commercial practices, including misleading or aggressive sales techniques. Car flippers should not engage in any unfair commercial practices when selling cars. If a car flipper fails to comply with these regulations, they may face legal action.
How many cars can you flip annually in the UK?
In the UK, there are no specific regulations on how many cars an individual can flip in a year. However, if an individual buys and sells cars frequently to make a profit, they may be considered a trader and required to register as such with the relevant authorities. This means that if someone buys and sells cars as a hobby or occasional activity, they are not considered a trader and are not subject to the same regulations.
When it comes to flipping cars in the UK, several factors can affect how many cars an individual is able to sell in a year. These may include the availability of cars to buy at a low price, the demand for certain types of vehicles, and the competition from other car flippers. Additionally, there may be regional differences in the market for used cars, which can impact the number of cars that can be flipped in a particular area.
Overall, the number of cars that can be flipped in the UK in a year is highly variable and depends on many factors. While there are no specific regulations on how many cars an individual can sell, those who engage in frequent car flipping may be considered traders and subject to additional regulations and requirements
Do car flippers need trade plates to flip cars in the UK?
If you intend to flip cars and drive unregistered and/or untaxed vehicles in your possession, it is mandatory to apply for trade license plates or “trade plates” from the DVLA. As mentioned earlier, you need a license to flip cars in the UK.
You can use trade plates for specific purposes such as test drives, deliveries, and transporting a vehicle to another motor trader’s premises. However, if you do not intend to drive unregistered or untaxed vehicles, then you do not need to apply for trade plates or register with the DVLA.
Trade plates only exempt you from taxing or registering a vehicle, and not from MOT testing requirements. So, supposing you plan to flip a large number of cars, registering with the DVLA may be a wise choice.
Do I need to register my car flipping business in the UK?
Let us assume you are flipping cars occasionally or just testing the waters, then it is not mandatory to register as a business. Also, if you are under the allowance threshold, you don’t even need to inform HMRC. However, if you plan to flip cars as a business or a side hustle, then you should register as a sole trader or set up a limited company.
Setting up as a sole trader is the simplest form of self-employment and the most common way of operating as a small business.
As an individual, you will run the business and keep any post-tax profits. However, the downside is that your personal and business assets are not separate, meaning you are personally responsible for any debts associated with the business.
To become a sole trader, you need to register as self-employed with HM Revenue & Customs.
The other option is to set up a private limited company, which is a separate legal entity completely independent of the person owning and running it. The company will have a director (usually yourself) who is responsible for running the company and at least one shareholder (usually yourself again). The company will need to submit its annual accounts to the Companies’ House and a tax return to HMRC. You can get advice from an accountant on how to set up a company and what other costs are involved.
Regardless of how you choose to set up your business, it is important to seek proper legal advice and consider all the liabilities and advantages to get a license to flip cars in the UK.
Conclusion – license to flip cars UK
While it is true that car dealerships require licensing in Scotland and other parts of the world, no license is needed in England or Wales. However, starting a business involves navigating numerous rules and regulations, which can make it easy to become confused about licensing requirements.