Flipping Cars in UK

[BradSherwin]

I bought a car of my mate a week ago which had a few things wrong with it, Ive touched it up where needed and want to sell it and get a little extra for it.

I enjoyed the whole process of it and think I might reinvest the money and carry on doing it, for al ittle extra income on the side so to speak.

The question which is on my lips is this. Is there any laws about selling cars regularly. Ive been told that in America that floating the title is illegal (signing the car over) and you can only do it so many times in USA. Im just owndering if any of this applies to UK laws. Ive done some snooping and I cannot find anything about flipping cars in UK.

Thanks

 

[KidsBeeHappy]

Yes, I think you need a traders license. The police are not happy about people doing this regularly from home because it frequently means that the vehicles in question aren't MOT'd or insured properly, but usually parked on the roadside or obstructing.

Contact your local council.

 

[Zeno]

Not entirely sure what you are on about but you can buy and sell as many cars as you like in the UK if that is what you mean.

You will be subject to tax on your profits on this. As far as I am aware, the only licensing required is if you want to offer credit agreements.

Depending on your employment income and level of work involved you may find the tax payable will make it seem less attractive.

 

[snipe12]

Traders licence is required. Can't remember how many you can sell before needing one. It's low though. Traders insurance policy is required as well. One which covers you to drive cars which are not taxed and often not MOT'd is quite expensive. A friend of mine pays £2k a year. The policy will also cover test drives.

 

[BradSherwin]

Not entirely sure what you are on about but you can buy and sell as many cars as you like in the UK if that is what you mean.

Well I was googling and people in the US say you can buy and sell upto 5 cars a year individually, if you sell more you need a traders licence. Look here

I just want to see if there are laws simular in the UK, I cannot find anything in the UK.

I won't be driving the cars so I wont be insuring them as I am only third party T+F. They will be signed to me but not driven.

As for tax, this wont be sole income, my mum is also an accountant so I wont have all the paper work/hassle. It is just a hobbie, always been a petrol head.

 

[Zeno]

Yeah but your poor mum will! Glad I never had kids.

I cannot find any mention of a licence required unless for motor vehicle salvage dealers that would not seem to be the case here.

 

[bovine]

try posting on the honestjohn forum - its more car-centric and there is a wide variety of people on there.

 

[lockyer]

By trader licence, I think what people are reffering to are trade plates. These are a set of number plates that you move from vehicle to vehicle to tax the. i.e you put them on the untaxed vehicle you are driving. They are only required if you are driving an untaxed vehicle. They cost about £200 per year but you do need trade insurance to get them. If you aren't driving the vehicles on the public highway there is nothing else you legally need to do apart from give a 3 month warranty on the vehicle.

 

[Esk247]

Well I was googling and people in the US say you can buy and sell upto 5 cars a year individually, if you sell more you need a traders licence. Look here

I just want to see if there are laws simular in the UK, I cannot find anything in the UK.

I won't be driving the cars so I wont be insuring them as I am only third party T+F. They will be signed to me but not driven.

As for tax, this wont be sole income, my mum is also an accountant so I wont have all the paper work/hassle. It is just a hobbie, always been a petrol head.

you won't be driving them??? so how can they be m.o.t'd and insured if you cannot get them to the test station.

me thinks you have a few holes in your business plan. you will need a traders license if this is going to be regular..e.g. slapping cars out on the drive with a for sale sign on them more than once in a few months is generally considered trading..especially when you are profiting and advertising on autotrader or the like to find buyers etc.

you will need to offer a test drive service and cars will have to be hpi checked for cat D cat C blah blah(more for conscience really but i always recommend it so you can put it on your advert)

its worth giving it a go but simply telephone the relevant authorities and ask for information..even the dvla might help with traders etc because they really don't want to spend time investigating you do they.... you may aswell just ask them for advice.

 

[lockie]

Have you factored in the fact it is getting harder and harder to sell cars ? My friend does exactly what you are proposing and is a paint sprayer so it only costs him his time and very little in materials.Most car traders get cars touched up to sell on as standard.

Recently hes noticed the amount of car traders going for the cheaper cars to sell as they cant seem to sell anything else.Hes also noticed how hard he is finding it to sell cars on.He gets them very cheap at auction and paints them to a high standard yet is struggling and his prices are very good.

 

[Esk247]

had another idea...can you strip the cars down???? then go to the car forums and sign up (remember to pay otherwise they get shirty about you advertising) and sell your parts on there to willing buyers.

vvoc.com << buy a premium package on there and it lasts a year....you can sell in the 'parts for sale section'

 

[BradSherwin]

Have you factored in the fact it is getting harder and harder to sell cars ? My friend does exactly what you are proposing and is a paint sprayer so it only costs him his time and very little in materials.Most car traders get cars touched up to sell on as standard.

Recently hes noticed the amount of car traders going for the cheaper cars to sell as they cant seem to sell anything else.Hes also noticed how hard he is finding it to sell cars on.He gets them very cheap at auction and paints them to a high standard yet is struggling and his prices are very good.

Why is it harder?

People are selling there gas guzzlers to buy economical/hybrid cars - customer potential there. The car market will never tire because of people just passing the test, selling/buying to either downgrade or upgrade, need a 5 door instead of a 3 door, old car has kicked the bucket...Whatever...Loads of circumstances.

If anything the car market should be booming because of horriable depreciation rates on cars. Why would someone pay full price for a car which has a nice shiny 09 registration and everyday you drive it you drop £100 down the drain? When you could buy used, few years old but still looks the business, runs a treat etc...and...oh yeh...heres the thousands ive just saved still in my bank.

I sold a Golf GTI motion 4 V6, immaculate inside and out, 50k on the clock the other week, made £600 of it. I picked it off ebay did nothing beides hover it and polish, bit of tyre black job done! I had to turn my mobile off I was getting that many calls.

Not bad for a days work. And got a free car for the week.

 

[BradSherwin]

you won't be driving them??? so how can they be m.o.t'd and insured if you cannot get them to the test station.

me thinks you have a few holes in your business plan. you will need a traders license if this is going to be regular..e.g. slapping cars out on the drive with a for sale sign on them more than once in a few months is generally considered trading..especially when you are profiting and advertising on autotrader or the like to find buyers etc.

you will need to offer a test drive service and cars will have to be hpi checked for cat D cat C blah blah(more for conscience really but i always recommend it so you can put it on your advert)

its worth giving it a go but simply telephone the relevant authorities and ask for information..even the dvla might help with traders etc because they really don't want to spend time investigating you do they.... you may aswell just ask them for advice.

Its not a business, just a sideline and hobby.

What if the car is MOT'ed? If not I get a mate to drive it, quite a few are fully comp. If it does go well then I will get traders insurance and licence. Tests drives are obvious, before I buy a car I test drive them.

IF this does become a regular thing then I will research how many cars you can sell before it becomes a 'business' and should notify IR for income taxes etc.

 

[Zeno]

Its not a business, just a sideline and hobby.

What if the car is MOT'ed? If not I get a mate to drive it, quite a few are fully comp. If it does go well then I will get traders insurance and licence. Tests drives are obvious, before I buy a car I test drive them.

IF this does become a regular thing then I will research how many cars you can sell before it becomes a 'business' and should notify IR for income taxes etc.

You already are running a business. If you buy a car with the sole intention of selling it for a profit, you are in the eyes of HMRC, running a business.

There are other factors of course but the profit motive here is very persuasive.

 

[Esk247]

Its not a business, just a sideline and hobby.

What if the car is MOT'ed? If not I get a mate to drive it, quite a few are fully comp. If it does go well then I will get traders insurance and licence. Tests drives are obvious, before I buy a car I test drive them.

IF this does become a regular thing then I will research how many cars you can sell before it becomes a 'business' and should notify IR for income taxes etc.

no i mean the person buying the car! they have to test drive them yes? so that means that you have to tax the car and m.o.t it...but if its sat on your drive for 3 months then the tax/mot may run out..plus its an added expense

what people usually do is...buy a car cheap, touch up the paintwork etc cheap, sorn it and then wait till someone pops along to test drive it..with trade plates they can then drive and test the car, when they want to buy it the garage then taxes and m.o.ts the car ready for you to insure and drive away.

the problem is...using your model, you'll have to buy cars with enough m.o.t and tax on them for you to do the work and then sell them PLUS i would only ever buy a car with a brand new m.o.t and brand new 6 month tax.

i'm not saying it won't work..just that it may be a bit tricky to get going.

the other thing is that the car market and second hand car market has collapsed..my cheapy vectra estate was £1250 last year..its now valued at £450 because nobody wants them...infact..nobody is swapping cars at all now..they prefer to stick to a car they know. me included..i'm keeping the vectra because i know its quirks, i know what i've had done on it and i know its just had an engine rebuild so as a second car its being kept until it dies.

thats just from my point of view ofcourse!

 

[Lincs Debt Collection]

you can but at your local motor auctions cars with MOT and sometimes TAX, google unicom for a trade insurance firm. They will cover you to drive any car in your custody third party. FYI stick to saxo's 106's punto's corsa's 25,s micra's etc (small easy to work on cheap cars that always sell). Avoid anything like a BMW Merc with an auto box, as a fault will wipe out your margin and probebly your capital. avoid escorts, and vectras theres just to many about. get as low mileage as possible and you should be OK. Buy right and sell on ebay will give you about a 15% - 25% margin. this is down to the maths of how long the cars on ebay and how many view it compared to the auction where you purchase in seconds with a room of people. You dont need trade plates for this, get a bog standard foundation account with Natwest and keep a spreadsheet in excel for each car you buy. dont try and do more than one a week and you will pull yourself a nice litte 3 - 400 quid a week.

 

[AirEars]

Ok, before I start, I AM a car dealer.

You dont need any license to sell cars.

You do need to register as a dealer in second hand goods with your local trading standards authority. Very easy and its free.

You dont have to give any warranty, but as with all goods they have to be fit for purpose. If something goes wrong (Fails) you should repair it, but you should take the age and condition of the car into consideration. The customer needs to understand he's buying an old car and cannot expect it to be faultless.

All cars have to be roadworthy, this includes tyres etc. Even if they are just parked up.

Trade plates are purely for test driving and delivering roadworthy un-taxed cars. Nothing else.

A consumer credit license is required if you intend to give any sort of credit.

V5's should be registered into the trade when you buy a vehicle.

Trade insurance varies greatly, mine is £600 fully comp for me and the wife, i'm 37 with full ncd.

I think that about covers it.

Cheers Jason