Hello,

I will be moving shortly to the greater Sheffield area and I have a side hobby where I enjoy haggling for a good price on a used car that is usually mechanically sound yet in need of some (mostly) cosmetic TLC. Once I've made improvements to the vehicle, I then sell it for a modest profit (often losing money if you take time and labor into account). I do this primarily because I enjoy the process of breathing new life into a neglected car.

In any case, I used to do this in the U.S. and the State I lived in mandated that one could only privately sell a maximum of 3 vehicles in any 12 month period without having to register as a used car dealer. This was fine for my purpose as I wouldn't have time to do a proper job on more than 3 cars per year.

I've found information on how to become a car dealer in England, but this is what I want to avoid.

I have not, however, been able to find out what the regulation is in England (or local jurisdiction) regarding the maximum number of private sales per year. Could someone please help clarify the rules regarding this or point me to an online resource?

Also, how does one absolve themselves of future claims on a car they've sold. In the U.S., they use the phrase "as is" in the private sale contract and the buyer then has no recourse against the seller in case problems arise with the vehicle at a later date. What are the local laws on this?

In the UK technically speaking you should declare your earned income to pay taxes and national insurance, where any is due. Im sure there are people who does this for a hobby and never declare it, but that's your choice, just like people who buy and sell stuffon ebay, etc. As you say, you may not make a profit anyway, in which case, you could always keep records anyway. However as I see it, the problem can occur if something goes wrong. What guarantees do you offer the buyer? Are you a business or is this purely a hobby?

Not too clear on the 'sold as seen' basis as far as the Law goes, but perhaps get in touch with Trading Standards.

May be wrong but I don't think there is a hard and fast rule. I looked at this myself because it is a hobby of mine too. If you are selling cars from home you are a dealer and have to abide by the rules, the fact that you renovated them, or lost money on the project is un-important. Suppose if you do one at a time and have them registered in your name for a while then you will be ok.

Thanks for the replies.

I'm not interested in tax avoidance. I would declare any income as required. I wouldn't be a business (in my eyes) just a hobby. Maybe I do one car a year, maybe 4, maybe none one year.

Just trying to determine the distinction between private seller and dealer.

For example:

Say you're well off and like driving a different car every 6 months, so every six months you're selling off one of your private cars to buy another one. Does that make you a car dealer and you need to be licensed as a business and have a vehicle display area, insurance, etc, etc?

Suppose if you do one at a time and have them registered in your name for a while then you will be ok.

Good point, perhaps you just need to keep it registered for a certain period of time. It's likely one or two cars a year wouldn't draw too much attention.

Still, I would think there is a regulation hidden somewhere in the law, but maybe not.

The rules are very vague to be honest.

HMRC distinguish between a hobby, which may make a little money and a business. The general definition is the intention of the person.

If the is intention to make money then it is a business. If you make a profit you pay taxes, if you make a loss you can claim that against other income or future profits.

If it is a hobby for interest or enjoyment, then there are no taxes to pay if you make a profit or no losses you can claim if you make a loss.

EBay has made the area a lot more unclear with people clearing out the attic, although I know that doesn't apply in this case, but HMRC are looking more at hobbies that make money and wonder if they are businesses.

There are no rules as to how many cars you can renovate in a year and it be a business or hobby. You could do 12 a year and that be a hobby. You could do one and that be a business.

The rules are very vague to be honest.
The general definition is the intention of the person.

Thanks for that. In my case the intention isn't the profit (if any), but the enjoyment of the process.


If it is a hobby for interest or enjoyment, then there are no taxes to pay if you make a profit or no losses you can claim if you make a loss.


Very interesting and unusually generous for a tax authority.

In many cases a hobby will not make a profit.

If you buy a car, do it up, and then sell it you might make a profit on that aspect, but with all the extra expenses you can claim for being in business this can lead to a loss.

Therefore you would be able to offset this loss against other income to obtain a tax refund.

The Revenue know they may lose a little bit of tax from someone who makes a profit out of a hobby, but they also know they will lose a lot more in tax refunds if they classify all hobbies as businesses.