Everything You Need to Know About Trade Plates

A trade plate (with its distinctive red characters on a white background) is used in place of a normal number plate when a vehicle is being moved or tested for business purposes.

For example, a dealership can put trade plates on a brand-new car so a customer can take it for a test drive before the car is officially registered. This benefits motor traders since using trade plates lets them stay on the right side of the law, and they’re simply saving the time and cost of registering every vehicle that they temporarily own.

Throughout this guide, we’ll explain everything from what trade plates are and who needs them to how to get them and the rules for using them.

What Are Trade Plates?

Trade plates are temporary number plates used by motor trade businesses so they can legally drive vehicles that haven’t been fully registered or taxed yet. They’re issued by the Driver and Vehicle Licensing Agency (DVLA) and come with red letters and numbers on a white background, which makes them pretty easy to spot.

And these trade plates identify the business, rather than the vehicle - they have a unique number that’s linked to your trade licence, which you can transfer between any different cars or vans you’re handling.

The primary purpose of trade plates is to let motor traders move vehicles on public roads without the normal road tax, just as long as it’s for business-related activities. This can include:

• Riving unregistered vehicles from a port to your dealership
• Taking a car to an MOT test
• Allowing a potential buyer to test drive a car that isn’t taxed yet.

For instance, if you’ve got a second-hand car that’s currently SORN (off-road) or a new car awaiting registration, you can pop your trade plates on it and drive it legally for a test drive or delivery to a customer. But this would be illegal without trade plates, as the vehicle has no valid tax or registration for the road.

So, they act like a “movable” registration for motor businesses. They spare you from having to register and tax each vehicle temporarily in your stock, which can save a lot of time and money.

How to Apply for Trade Plates?

To apply for trade plates, fill out the application form, submit the right documents, pay the application fee, and wait for approval. And since trade plates are effectively a licence to drive untaxed vehicles, you’ll need to prove you’re eligible and have proper insurance in place.

The DVLA handles this application, and you’ll be using specific forms (either VTL301 for a first-time application or VTL318 for renewals) to get your trade licence. See how the process looks here:

1. Step 1: Fill Out the Application Form: Complete the correct DVLA form for your situation - Form VTL301 is for your first trade licence (or additional sets of plates), then there’s Form VTL318 for renewing an existing trade licence.

   Fill either of those in with your business details, including your company name, address, and the nature of your motor trade business (for example, whether you’re a vehicle dealer or a tester).  Remember. you’re at risk of delays or rejections if you submit the wrong form. Make sure you’ve downloaded the right one before you start filling it in.

2. Step 2: Submit Required Documents: The DVLA requires proof of motor trade insurance. You have to include a copy of your Motor Trade Insurance Certificate with your application. This shows that you have the correct insurance coverage for driving vehicles in connection with your business.

   Make sure the name on the insurance certificate exactly matches your business name on the application form. If it doesn’t, the DVLA won’t approve your request. Include any other documents mentioned in the form’s guidance notes - such as proof of business address or identity, if requested.

3. Step 3: Pay the Application Fee: There’s a fee for a trade licence, which you’ll need to pay to complete the application (it essentially covers the road tax duty for using trade plates). You can choose a 6-month or 12-month trade licence..

   As of the latest DVLA rates, a 6-month trade plate licence costs £94.05 for cars and vans, while a 12-month licence is around £171 (Motorcycles and tricycles are cheaper - roughly two-thirds the price for the same period). You can pay this fee either by cheque or postal order made out to “DVLA Swansea,” submitted with your application form.

4. Step 4: Wait for Approval: If everything is in order, you should receive a confirmation letter and your physical trade plates within about 4 weeks of applying. It’s a bit of a waiting game, so don’t be alarmed if you don’t hear back immediately. But if more than 4 weeks pass with no word, you should contact the DVLA to inquire about the status.

   Once your application is approved, you’ll be issued a trade licence number and your shiny new trade plates - and now you’re ready to start using them legally!

Who Needs Trade Plates?

Not every driver or business can use trade plates - they’re specifically intended for those in the motor trade industry (such as motor dealers, vehicle testers, repair garages, and car auctions).

Basically, if your work involves having vehicles in your possession temporarily (for example, to sell, fix, or test them), then trade plates could be a big help. Take a look at the main types of businesses and professionals who usually need and use trade plates here:

• Motor Dealers: Car dealerships and traders frequently use trade plates to move vehicles that aren’t registered to them to deliver a sold vehicle to its new owner or to let a customer take an unregistered car for a spin.

  The main benefit here is that this is fully legal as long as the driving is for business purposes, like demonstrations or delivery, and the vehicle is in roadworthy condition. Trade plates help motor dealers stay compliant with road tax laws while keeping their business moving.

• Vehicle Testers: Vehicle testers - such as MOT test centres or garage mechanics who need to drive customers’ vehicles to diagnose issues - also rely on trade plates.

  For instance, say you’re a specialist automotive engineer or an MOT station that needs to conduct a road test on a car to pinpoint a problem. You can legally take the car out for a short road test with trade plates. Essentially, trade plates cover the vehicle tester under their trade licence while they are driving the vehicle for testing purposes.

• Repair Garages and Service Centres: Repair garages and service centres use trade plates to move vehicles around, especially if they have multiple locations or need to pick up/drop off customer cars. If they need to take a customer’s untaxed vehicle out on the road to ensure a repair is successful, trade plates let them do this legally without registering each vehicle.

  Garages also need trade plates to legally transport vehicles between locations instead of arranging a transporter - maybe moving a car from a main garage to a second workshop for specialised work.

• Auction Houses and Logistics Firms: Auction houses often have lots of cars that have been sold but not yet registered to buyers - they use trade plates to move them between the auction site and dealerships or to new owners.

  Similarly, logistics firms attach trade plates and drive the car to its destination when they need to ferry an untaxed vehicle from point A to point B. This is much simpler than loading each car onto a truck. Trade plates effectively let auction and logistics services function efficiently - imagine the bottleneck if every single car moving through an auction had to be individually taxed before transport!

What Are the Benefits of Using Trade Plates?

Using trade plates comes with plenty of advantages for a range of different motor trade businesses. The time and money you’re saving by not having to register every individual car you’re driving are probably the highlights, but there are some other notable ones worth taking a look at:

• Save Time on Vehicle Registration and Taxation: Trade plates get rid of the need to individually register and tax every vehicle that comes into your hands temporarily. This is a huge time-saver - instead of filling out forms and paying tax for each car, you use your trade plate licence to cover them all.

  For example, a dealer can rotate one set of trade plates across dozens of cars in a month - your operations are far more streamlined, and you’ll have less administrative workload.

• Simplify Vehicle Movement Between Locations: Moving vehicles from one place to another becomes much easier with trade plates. Transferring cars between dealership branches? Taking a customer’s car out for a post-service test drive, or delivering a sold vehicle to its new owner? You can just attach your trade plates and go.

  There’s no need to arrange special transport or temporary export plates - trade plates are your all-access pass to drive the car legally on the road for business errands.

• Test Drive Vehicles Without Registration: One big perk for dealers is the ability to offer test drives on cars that haven’t been registered yet. So, prospective buyers can legally take an unregistered car out on public roads when it’s fitted with trade plates.

  This helps sell vehicles (people like to drive before they buy!) without all the bureaucracy of registering a car that might not even end up sold. And it’s similarly useful for mechanics who need to road-test a customer’s unregistered or SORN vehicle - they can check if the repairs are effective by driving the car with trade plates. Again, all within the law.

• Cost-Effective for Motor Traders: Trade plates can save businesses a lot of money, since a trader just pays the trade licence fee for the plates instead of paying vehicle tax on every single car (many of which might only be in stock for a short time). And that covers all the vehicles they drive under those plates.

  Over a year, this can provide some massive savings, especially for high-volume dealerships or traders. And it also saves money on potential fines.

So, the flexibility and financial savings you’re getting with trade plates make them a no-brainer. You’re now able to focus on running your business (selling and fixing vehicles) rather than tackling all the paperwork/fees for each car.

What Are the Rules and Restrictions for Using Trade Plates in the UK?

While trade plates are incredibly useful, they come with strict rules and restrictions. Naturally, the DVLA and police keep a close eye on trade plate usage, so you’ve got to follow these regulations carefully. And the stakes are high when you’re risking fines of up to £5,000 for misusing trade plates. So, what can you do to avoid breaking the law when using trade plates?

• Ensure Business Use Only: Trade plates can only be used for genuine business purposes related to the motor trade. So, you should only use them for activities like test drives, vehicle delivery, moving stock between lots, etc., as declared on your application.

  Using trade plates for any personal errand or non-trade activity is illegal. The plates should never be used outside of working purposes (no “just popping to the shop” after hours). If you’re caught using trade plates privately, you risk losing the plates and facing heavy fines.

• Keep Vehicles Roadworthy: Even though a car with trade plates doesn’t need its own tax, it still has to be safe and legal to drive on the road. The vehicle should be roadworthy - meaning it meets basic safety standards - and if it’s old enough to require an MOT, it must have a valid MOT certificate (or be exempt).

  Trade plates are not a free pass to drive unroadworthy bangers around. For example, if a car would normally need an MOT but doesn’t have one, you can’t just use trade plates to drive it. And it has to be insured under your motor trade insurance when it’s on trade plates.

• Display Plates Correctly: There are specific rules on how to display trade plates on a vehicle. They must be placed externally on the vehicle - one on the front and one on the back (for a motorcycle, just one on the rear). The plates should be clearly visible and readable from 20 metres away.

  And the trade plates can’t cover the vehicle’s existing registration plates. Again, improperly displayed trade plates could get you pulled over and even fined, so just follow those simple tips, and you’ll be alright.

• Avoid Misuse to Prevent Fines: Any use outside the permitted purposes (as outlined by DVLA) can result in penalties - letting someone else borrow your trade plates for their own use is absolutely forbidden, for instance. The plates are only for the licensed business.

  Similarly, making false statements on your application (like misrepresenting your business) or altering the plates fraudulently carries the same hefty £5,000 maximum fine (and even the possibility of a prison term for serious fraud). Even lesser misuse, like using the plates for a purpose not allowed (say, using them on a vehicle for a job that isn’t connected to your trade), can trigger a fine of up to £1,000 or five times the vehicle’s tax rate, whichever is greater.

• Adhere to Vehicle Movement Rules: Trade plates are meant for moving vehicles temporarily - they’re not a substitute for permanently taxing a vehicle that you’re using regularly. So, you can’t put trade plates on a car and use it as your daily driver or keep it parked on the public road indefinitely.

  Vehicles should generally be kept off-road (or on private property) when they’re not actively being driven under trade plates. Also, only one vehicle at a time can use a set of trade plates - you can’t have two of your cars out, driven by two different employees using the same pair of plates. Each set of plates covers one vehicle at a time, and if you need to move multiple vehicles simultaneously, you’ll need multiple trade licences.

You’ll keep your business on the right side of the law if you follow all those rules, which really aren’t too difficult to follow.

How Much Do Trade Plates Cost?

A trade plate licence costs £94.05 for 6 months or £171.00 for 12 months for standard vehicles like cars and vans. If you’re dealing with motorcycles or tricycles only, there’s a cheaper rate (around £66 for 6 months, £121 for 12 months).

The cost is basically an alternative to vehicle tax, and it depends on how long you want the licence for. In the UK, you can usually choose either a 6-month trade licence or a 12-month trade licence.

Also, it’s worth explaining how the timing works: if you apply in January, you could opt for a 6-month licence that runs until 30 June (cost ~£94), or a 12-month licence until the 31st of December (cost ~£171).

If you apply at another point in the year, the DVLA will calculate the fee for however many months remain until the next June or December. So, for example, applying in August means your first trade licence will run 11 months (August to the following June) and cost the 11-month rate (which is the same as the 12-month fee in that case).

Essentially, you always pay up to the next expiry cycle. When renewing, you then have the choice of sticking to a half-year or full-year renewal.

And if your business no longer needs the plates, you can even surrender the trade licence and return the plates to DVLA for a pro-rata refund of any full months remaining. This might happen if, for instance, you stop trading or sell your business partway through the year. But it’s good to know that you don’t lose all the unused months you paid for.

So, budget roughly a hundred pounds for a half-year licence or under two hundred for a full year for a set of trade plates.

What Insurance Are Required for Trade Plates?

Having the correct insurance is absolutely mandatory when using trade plates. Before the DVLA will even issue you a trade plate licence, you have to prove that you have a valid motor trade insurance policy in place.

This is a special type of insurance designed for businesses in the motor trade, and it covers you to drive vehicles that you don’t own (such as customers’ cars or stock vehicles) for business purposes.

Your motor trade insurance needs to cover road risks - meaning it allows you and your employees to drive any vehicle in your custody or control for motor trade activities

When you apply for trade plates, you send a copy of your Motor Trade Insurance Certificate to the DVLA, and the business name on that certificate has to match the name on the trade plate application. If they don’t match or if you don’t have the right kind of insurance, the DVLA will reject your application.

Then, it’s your responsibility to keep your insurance up to date and to use it correctly. This means informing your insurer of the trade plate number you’ve been assigned and making sure it’s noted on the Motor Insurance Database (MID) that you have a trade plate licence.

So, to use trade plates legally, you need:

1. A valid motor trade insurance policy covering the necessary activities (trade plate driving included)
2. To make sure any use of trade plates is within the scope of that policy.

If you have the right cover, you’ll be protected if something happens while you’re out driving a car on trade plates. It’s illegal if you don’t, plus you’re at massive financial risk.

How to Renew Your Trade Plates?

Renewing your trade plates is an important task to keep on your calendar, because trade licences expire either after 6 months or 12 months (depending on what you chase).

• Renewal Process: The DVLA will usually send out a renewal reminder letter a few weeks before your plates are due to expire, which will have instructions and may even include a partially completed form for renewal. But you can also download and complete Form VTL318 (the trade licence renewal form) yourself.

• Updating Documents: The renewal process asks for updates on your details if anything has changed, and you’ll again need to provide proof of motor trade insurance with the renewal and a copy of your current Motor Trade Insurance Certificate to show you’re still properly insured.

  If your insurance or business details have changed, make sure to sort those out before sending the renewal.

• Paying the Renewal Fee: The payment methods and amounts will be similar to when you first applied (and will be indicated in the renewal paperwork or online guidance).

Always check what the new expiry date is (it should be printed on the confirmation or on the plates themselves), and remove the plates from any vehicles if they ever do expire so you don’t accidentally break the law.

What Common Mistakes Should You Avoid with Trade Plates?

Trade plates are a great tool, but it’s crucial that you’re using them properly so you can avoid any legal issues. These are some of the more common mistakes people make with trade plates:

• Misusing Trade Plates for Personal Use: This is the number one issue. It might be tempting to use those red-and-white plates to run a personal errand, but don’t do it. Using trade plates on a vehicle for anything other than official business purposes is illegal. If you’re caught, you could face hefty fines or even lose your trade licence.
• Failing to Ensure Vehicles Are Roadworthy: All vehicles driven on public roads - trade plates or not - have to be roadworthy. That means if the vehicle needs an MOT, it should have one (unless you are literally driving it to a pre-booked MOT test).

Also, check basics like tyres, brakes, lights, etc., before taking a car out, because you’ll be in trouble just the same as if it had regular plates if you drive an unsafe car on trade plates and get stopped.

• Not Keeping Proper Documentation: Make sure you have your trade licence certificate and insurance details accessible. Also, it’s not legally required to log every journey, but it’s good practice to keep a simple record of which vehicles you’ve used the plates on and for what purpose (especially if you have employees using them).

  And lastly, keep the Motor Insurance Database updated with any new vehicles in your possession and your trade plate details.

• Ignoring Expiry Dates and Renewal: You can face fines for using an unlicensed vehicle (because once the trade licence expires, the vehicle is effectively unlicensed on the road).

  Avoid this by making a note of your renewal date well in advance. The plates themselves might have a small printed date, or your confirmation letter will state when they run out, so pay attention to it.

• Incorrectly Displaying Trade Plates: Improperly displaying your trade plates - inside the windscreen or rear window (instead of fixing them outside) or even covering the car’s original number plate entirely - is an easy mistake that can attract police attention.

  You ideally want to be using a proper trade plate holder, so that it’s secure and you’re avoiding fines (even a £100 fine for mis-displayed number plates is possible).

Basically, a lot of these pitfalls come down to using common sense and treating trade plates with the same respect as you would full registration plates - they’re not just a loophole to exploit. When in doubt, always refer back to DVLA’s guidelines or contact them for clarification!