You do not need a licence to sell cars to the public in England or Wales. But as far as trading standards are concerned, must have the relevant insurance cover and register your business for VAT purposes with Her Majesty's Revenue and Customs (HMRC).

However, if you plan to operate as a used car dealer in Scotland, you will need to apply for a Second Hand Motor Vehicle Dealer's Licence from your local authority. If you are selling for charity or buying cars directly from a second hand car dealer who already is licensed, you will be exempt from holding a licence in Scotland, too.

Things You Will Need

  • Registered premises

  • Funds

  • Insurance cover

  • VAT number

Apply to a Scottish Council. If you wish to sell used cars in Scotland you can apply to be licensed by the council where your business is registered by downloading an application form from its website. You can apply for either a full licence, which starts three weeks from the date of application and can be renewed every three years, or a non-renewable temporary licence which is normally valid for six weeks. At present, a full licence costs £2,000 while a temporary licence is fixed at £92.

Get trader insurance. Since selling cars does not require a licence under current English and Welsh laws, you will need to be fully insured as a motor trader before launching your business. You can contact individual motor insurance companies or make use of one of the UK's price comparison sites to get competitive insurance quotes. Insurance premiums can be rather high, and they vary according to the type of premises you will be selling from. Nevertheless, they provide cover for various aspects of the trade, including being insured to drive anyone's vehicle for the purposes of the business.

Register your business for VAT. In order to operate legally as a business anywhere in the United Kingdom, you must be registered with the HMRC and pay appropriate tax. VAT is paid on the majority of goods and services provided by businesses in the UK, including vehicles imported from countries outside the European Union. Unlike in the United States, where the equivalent of a VAT is added only at the point of purchase, in the UK, VAT is added to the price advertised. So it is important to start off correctly. You can apply to obtain your VAT number by completing an online form on the HMRC website.