Do Motor Traders Tax Vehicles?

If you are wondering whether or not motor traders can pay car tax on the vehicles they sell (or are about to sell), you will find the answer to this question in the following blog post. In addition to this, we will also discuss how motor traders tax vehicles and if there are any exceptions and exemptions regarding vehicle taxation that apply particularly to them.

Do Motor Traders Tax Vehicles?

Yes, Motor Traders in the UK are generally required to tax vehicles unless specific exemptions apply. The requirement to tax vehicles applies to motor traders who buy, sell, or otherwise deal with vehicles in the course of their business operations. 

However, motor traders are only required to tax vehicles that are about to be sold once a purchase is finalised. As long as a vehicle stays in their possession on private property and is not purchased by a customer, there is no compulsion to tax the vehicle until the transfer of ownership is confirmed.

In such cases, motor traders can pay the due amount of Vehicle Excise Duty on a car on behalf of the customer. They do this by using the vehicle logbook or V5C/2 of the vehicle about to make a sale. The amount paid for Road Tax or Vehicle Excise Duty is added to the cost of the vehicle when the price is offered to potential customers.

Once the sale is finalised, motor traders can pay the Vehicle Excise Duty on behalf of the customer and have the vehicle logbook transferred to their name before the final payment is made and the customer drives the vehicle away from the trader’s premises.

When it comes to taxing new and used vehicles as a motor trader in the UK, it is essential to ensure compliance with the relevant regulations. For this, it is important for motor traders to

understand the different tax classes and rates applicable to new and used vehicles when they are taxing a vehicle about to be sold. 

In addition to this, when it comes to the sale of used vehicles, a motor trader would need to verify the vehicle’s tax status before making any sales or purchasing decisions and check if the vehicle has valid tax or is registered as off-the-road (SORN).

In order to ensure correct payment of Vehicle Excise Duty,  motor traders need to maintain comprehensive records of all vehicle transactions, including purchases, sales, and taxation details and submit periodic reports to the tax authorities. 

How Do Motor Traders Tax Vehicles For Customers?

When a customer buys a car from a motor trader, they will usually arrange for the car tax to be paid on your behalf. They will need the following information from you:

  • Your name
  • Your address
  • The vehicle’s V5C/2 registration or New Keeper Supplement

They can then make car tax payments on your behalf in any of the following ways:

  • Online
  • Over the phone
  • At the local post office

Once the car tax has been paid, the dealer will give you your vehicle logbook or V5C registration certificate.

Are There Any Exceptions And Exemptions For Motor Traders Taxing Vehicles?

Yes, there are certain exceptions and exemptions that motor traders in the UK may be eligible for when it comes to vehicle taxation. Following are some of the common exemptions and exceptions for motor traders in the UK:

  • Motor traders have the option to use trade plates, which are special license plates issued for temporary use. When using trade plates, motor traders can drive or demonstrate vehicles without individual vehicle taxation. 
  • If a vehicle is not driven or kept on public roads, it may be exempt from vehicle taxation. This exemption applies to vehicles that are solely used on private property, such as dealership lots or storage facilities, and are not used on public roads.
  • Motor traders have the option to declare vehicles as off the road (SORN) if they are not in use and are kept on private property. SORN vehicles are exempt from vehicle taxation as long as they are not driven or parked on public roads.


The above discussion helps to conclude that motor traders are required to tax the vehicles that they possess; however, only when they have made a sale and the vehicle is about to change ownership. As long as the vehicles are parked within private property (of the motor trader) and not being driven on public roads, they need not be taxed.


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How do used car dealers/traders tax a car? – Page 1 – General Gassing – PistonHeads UK