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A motor trader is a business that manufactures, repairs, deals in, modifies or valets vehicles, as defined for DVLA purposes by vehicle licensing law. The term matters because it decides eligibility for trade plates, the insurance you need and the duties you owe buyers.
Part of: Motor trade insurance
In short
For DVLA purposes, section 62 of the Vehicle Excise and Registration Act 1994 defines a motor trader as a manufacturer or repairer of, or dealer in, vehicles, and regulations add modifying and valeting businesses. For tax, HMRC looks at the badges of trade. For consumer law, a trader is anyone acting for their business. Insurers treat anyone who drives vehicles in the course of these activities as needing motor trade cover rather than a private car policy.
Section 62(1) of the Vehicle Excise and Registration Act 1994 defines a motor trader as a manufacturer or repairer of, or dealer in, vehicles, or a business of a description prescribed by regulations. A business consisting wholly or mainly of collecting and delivering vehicles is treated as a dealer. Regulation 35 of the Road Vehicles (Registration and Licensing) Regulations 2002 prescribes two more: modifying vehicles, including fitting accessories, and valeting vehicles. Motor traders, and people intending to become one, can apply for a trade licence. See trade plates.
HMRC does not use a car count. Its Business Income Manual at BIM20205 lists nine badges of trade, including a profit motive, the number of transactions, changes made to the asset and the time between buying and selling. No single badge is decisive. Our guide to how many cars you can sell before you are a trader applies them to car sales.
Under section 2 of the Consumer Rights Act 2015 a trader is a person acting for purposes relating to their trade, business, craft or profession. A trader selling a car to a consumer must meet the Act's statutory rights, such as satisfactory quality, and since 6 April 2025 falsely presenting yourself as a consumer is a banned practice under Schedule 20 to the Digital Markets, Competition and Consumers Act 2024.
Insurers usually treat someone who drives vehicles in the course of these activities as a motor trader. Private car policies commonly exclude motor trade use, so traders usually need road risks cover or a combined policy that adds premises, stock and liability. Common types include part-time and home-based traders, used car dealers, garages and mobile mechanics. Using a vehicle without valid insurance is an offence under section 143 of the Road Traffic Act 1988. Related entries: compulsory motor insurance and Motor Insurers' Bureau.
Apex arranges motor trade insurance, from road risks for part-time and home-based traders to combined policies for dealers and garages. A broker reads your enquiry and comes back with options, with no fee for a quote, subject to the insurer's acceptance and the policy terms. To quote, we need to know what the business does, your address and any premises, who drives (ages, licences and points), turnover, vehicle values (your own stock and customers' vehicles) and claims history. See motor trade insurance.
For vehicle licensing, section 62(1) of the Vehicle Excise and Registration Act 1994 defines a motor trader as a manufacturer or repairer of, or dealer in, vehicles. Regulations add businesses that modify or valet vehicles, and a business mainly collecting and delivering vehicles is treated as a dealer.
For DVLA trade licence purposes, yes. Regulation 35 of the Road Vehicles (Registration and Licensing) Regulations 2002 prescribes the business of valeting vehicles as a motor trader business. Valeters who drive customers' cars usually need motor trade cover rather than a private policy.
There is no set number. HMRC applies the badges of trade, such as profit motive, repeated transactions and quick resale, and no single badge decides the question. One car bought to sell at a profit can be trading.
Usually, yes. Private car policies commonly exclude motor trade use, so traders typically need a motor trade policy: road risks only for driving, or a combined policy adding premises, stock and liability. Cover is subject to the insurer's acceptance and the policy terms.
Tell us what your business does, who drives, your premises and vehicle values. A broker reads every enquiry and comes back with options. No fee for a quote. Or call 0117 325 0027.
Start a motor trade enquiry Request a callbackApex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances, and it does not guarantee that cover will be available or on what terms.
