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Motor Trade Business Regulations

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Running a business can be tricky at the best of times. It takes blood, sweat and tears and battling through what can feel like endless red tape to create a successful business. If you’re thinking of becoming a car or motor trader here are some of the rules and regulations you might need to consider.


If you’re running any kind of business you’ll more than likely be expected to pay business rates, this includes motor traders and car dealers. So basically if you’re not using the building to live in you’ll most likely have to pay up. Even if you are trading from your driveway or garage, chances are business rates will apply to that part of your home.


Planning on running your motor trade business from home or premises that was not originally a vehicle dealership? It’s a good idea to check that you can legally sell cars from your premises as you might have to apply for planning permission to change the use of the premises.

Change of use can be applied to areas where you are running your business from, for example, if you are trading vehicles from your driveway or garden you can apply for a change of use for this area only and not the entire property.


If you’re self-employed as a sole trader or a partner in a business you’ll need to fill out and return a self-assessment tax return to the HMRC. It’s important that you keep all your business records, such as your:

  • business income, expenses and sales
  • VAT records if you’re registered for VAT
  • PAYE income if you have employees
  • personal income

You should also keep a record of all:

  • receipts of goods or stock
  • bank statements and cheque book stubs
  • sales invoice, till rolls and bank slips

These records will help you when it comes to returning your self-assessment tax return and shows as evidence if HMRC ask to see proof.


If you’ve bought or sold a vehicle it’s a legal requirement that you inform the DVLA, you can do this on the .gov.uk website.

You must also keep the MID updated on any vehicles that you have bought or sold. You can do this using our MID app or our EasyMID portal.


This legislation was introduced in October 2015, replacing the Sales of Goods Act, Unfair Terms in Consumer Contracts Regulations and the Supply of Goods and Services Act. The aim of the act is to protect shoppers and help them understand their rights.

The rules of the act state that the vehicle you supply is:

  • of satisfactory quality and not damaged or faulty
  • it is fit for purpose
  • as described by your advertising

Customers will have 30 days to reject the vehicle and return it to you, for a full refund if it’s found to be of unsatisfactory quality, not fit for purpose or not as you have described it.

After the first 30-days, you will have the opportunity to repair or replace the vehicle if the customer is unhappy. If repairing or replacing the vehicle is not possible the customer is entitled to a full refund.

Want to avoid any lengthy claims and hassle when it comes to selling a vehicle? It is best practice to:

  • MOT each vehicle you sell
  • perform a pre-delivery inspection (PDI) of the vehicle and keep good records of the inspection
  • Allow the customer to test drive the vehicle. To allow your customer to test drive a vehicle you can add Accompanied Demonstration onto your motor trade insurance policy as an optional extra.
  • Have the customer sign to say that there were no apparent faults during the test drive

So, if you are planning on starting a motor trade business or if you’re already trading, then hopefully you’ll now have a better understanding of some of the rules and regulations that are involved.

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