Before you buy your first load of scrap, find out whether you need a licence, what you must record and how you are allowed to pay. In many countries the rules for scrap are stricter than for most small businesses, because scrap metal is a common target for theft. A business that ignores them can be fined or shut down, and a seller who buys from the public without checking identity can end up holding stolen goods. This article sets out what we could verify from official and council sources in the United Kingdom, Australia and the United States, what we could only find in business blogs for India and the United Arab Emirates, and the documents you should have ready almost anywhere. It is general information, not legal advice. Rules change and differ by state, city and activity, so confirm every point with your local regulator before you trade.
If you are looking at the other route, working as a broker or agent without a yard, see Become a Scrap Broker or Agent: How to Start. Licensing questions apply there too.
The pattern in most places
The countries we checked ask for some combination of the same five things:
- A licence or registration to deal in scrap, often from the local council or a state regulator.
- Identity checks on sellers, with copies or details recorded.
- No cash. Payment by bank transfer or cheque, so there is a record.
- Transaction records kept for a set period and available to police or inspectors.
- Environmental permission if you store, sort or process material on a site, or carry waste.
The details differ most on who issues the licence, how long records must be kept and what happens if you break the rules.
United Kingdom
Scrap metal dealing is regulated by the Scrap Metal Dealers Act 2013 and licensed by local councils. The council guidance we read agrees on the main points [1][2]:
- Two licence types. A site licence for a fixed premises and a collector's licence for mobile collection. A collector needs a separate licence from each council area where they collect.
- Suitability checks. Applicants must be suitable persons, which means no relevant convictions. Councils ask for a criminal records check. Cambridge, for example, asks for a basic DBS certificate less than three months old and a tax check code from GOV.UK [2]. Other councils set different time limits, so check yours.
- Term. A licence lasts three years and must then be renewed.
- Fees. Set by each council. Cambridge lists £540 for a site licence and £232 for a collector's licence, which shows the scale but should not be taken as a national figure [2].
- No cash. Payment must be by cheque or electronic transfer. Cash payment is an offence for the dealer and the site manager, with a defence if they had arrangements to prevent it [1].
- Seller identity and records. Dealers must verify the seller's name and address from documents, keep copies, and record the description and weight of the metal, the date and time and the delivering vehicle's registration. Councils say records must be kept for three years [1].
- Waste carrier registration. Collectors also need an Environment Agency waste carrier registration [1].
Trading without a licence can lead to prosecution and a fine.
Australia
Scrap metal rules are made by the states, and they differ. We could verify two.
Victoria. Consumer Affairs Victoria says anyone dealing in scrap metal must be a registered second-hand dealer [3]. Key points:
- No cash. Dealers are prohibited from paying or receiving cash. Permitted payments are a non-transferable cheque not payable to cash or an electronic funds transfer, not e-currency.
- Buying records. The description with quantity or weight, the vehicle identifier for vehicles, the seller's name, address and identification details, the date and time received, a copy of the payment and the name of any agent.
- Selling records. The description, the buyer's name and address, the date, time, method and place of disposal, a copy of the payment and any shipping container details.
- Lots. Items worth less than A$100 can be logged as one entry. Items worth A$100 or more must be recorded individually.
- Penalties. Cash dealing carries 200 penalty units and failing to keep records 20 units. At the 2026-27 value of A$209.10 a unit, that is A$41,820 and A$4,182, plus on-the-spot fines for being unregistered or dealing in cash [3].
- Holding period. Scrap metal is exempt from the general seven-day hold for second-hand goods, and copper above 80% by weight is exempt if the dealer keeps a photograph [3].
Queensland. The Queensland Government page covers licensed second-hand dealers and pawnbrokers. Licensed dealers must trade from licensed premises, keep a transaction register, sight the seller's identification and record the seller's details, and hold nominated goods for seven working days. The page says Parliament was considering laws specifically on stolen scrap metal and that they would affect second-hand dealers once in place. It does not say whether scrap dealers are covered today, so check with Queensland's fair trading regulator [4].
New South Wales. NSW Police publishes fact sheets on scrap metal registration, record keeping and motor vehicles and notes that amendments to the scrap metal law commenced on 1 September 2024. We could not read the fact sheets, so we do not state the NSW rules here. Read them on the NSW Police website [5].
Environmental permits. Sites that process or store scrap may also need an environmental licence from the state EPA. We did not verify the thresholds, so ask your state EPA.
United States
We found no single national scrap dealer licence. The rules we found are set by states and, in many places, by cities and counties. ReMA, the recycling industry's trade association, publishes summaries of state laws. Its New York summary, dated October 2022, distinguishes licensed scrap processors (Article 6-C of the General Business Law) from junk dealers (Article 6), with separate licensing, record keeping, retention and inspection rules, and it covers catalytic converters [6]. Catalytic converters are the most heavily regulated item. Delaware, for example, requires records of the seller's licence number and the vehicle source and does not allow cash payment for converters [7].
Several other states have proposed or enacted converter laws, including photo identification and limits on sales per day, but we did not confirm which bills passed. Check your state's statute on the legislature's website and ask ReMA or your state recycling association for a current summary.
India and the UAE: secondary sources only
For these two we found business-consulting blogs and community guides, not official sources, so treat the following as a starting list of questions for the regulator.
- India. Guides commonly list GST registration, a municipal trade licence, Udyam (MSME) registration and approval from the State Pollution Control Board, with extra authorisation for e-waste, batteries or hazardous material. The board's documents are described as including ownership or lease proof of premises, PAN and Aadhaar, a trade licence and a project report. One guide says buyers of metal scrap deduct 2% TDS [8]. Document lists and processes vary by state.
- United Arab Emirates. Consultancies say a trade licence from the Department of Economic Development in Dubai, or a free zone authority, is needed, commonly under an activity described as scrap and metal waste trading, and that a trading licence does not cover processing, which needs an industrial licence. They also mention an environmental clearance for certain materials and give licence costs that conflict between sources [9]. Confirm the activity code, the environmental permit and the cost with the licensing authority.
Documents to have ready
Almost everywhere you will be asked for some of these. Which apply depends on your country and activity.
| Document | Why it is asked for |
|---|---|
| Photo identification | To prove who you are, and to record yourself as the dealer |
| Business registration and tax number | To trade legally and report tax |
| Criminal records or suitability check | Required by some regulators, such as UK councils |
| Proof of premises (lease or ownership) and zoning approval | For a site, for licensing and permits |
| Insurance, including public liability | Often required by councils, landlords and buyers |
| Environmental permit | If you store, sort or process material, or carry waste |
| Seller identification copies and transaction records | Required by dealer laws in the UK and Victoria, and in many US states |
| Bank account details | To pay by transfer instead of cash |
How to check the rules for your place
- Start with the regulator. In most countries that is the local council, a state consumer or fair trading office, or a state environmental agency.
- Ask three questions. Do I need a licence or registration to buy scrap from the public? What records must I keep and for how long? How am I allowed to pay?
- Ask your buyer. Mills and exporters know which documents they need from a supplier and will tell you.
- Keep records from day one. Even where the rules are light, a record of who sold you what protects you.
For the cost side of starting, see How Much Money to Start a Scrap Business? and Seven Things You Need to Start a Scrap Business. For the practical steps, see How to Start a Recycling Company and Find Scrap. To see how ScrapTrade verifies who you trade with, read trust and safety.
Frequently asked questions
Do I need a licence to start a scrap business?
In many countries yes. The UK requires a council licence and Victoria requires registration as a second-hand dealer. Rules differ by place and activity, so ask your regulator [1][3].
Can I pay for scrap in cash?
Not in the UK or Victoria. Payment must be by transfer or cheque. Some US states restrict cash for catalytic converters [1][3][7].
What records must I keep?
Seller identity, a description and weight of what you bought, the date and time, and proof of payment. UK councils say three years. Victoria requires records but its page does not state a retention period [1][3].
Do I need a licence to be a broker or agent?
It depends on where you are and what you do. Ask your regulator or a qualified adviser.
Where do I find the rules for my state or city?
On the regulator's website, and through your national or state recycling association.
Sources
- Council guidance on the Scrap Metal Dealers Act 2013, including Wigan Council and East Suffolk Council. Check the Act and your council for current rules.
- Cambridge City Council, Scrap metal dealer's licence.
- Consumer Affairs Victoria, Scrap metal laws.
- Queensland Government, Legal requirements for second-hand dealers and pawnbrokers.
- NSW Police, Scrap metal industry fact sheets.
- ReMA, New York metal law summary (October 2022).
- State of Delaware, session law on catalytic converter purchases.
- LegalRaasta, How to start a scrap business in India, and community guides on pollution control consents. Business blogs, not official sources.
- Business-setup consultancy guides, including Meydan Free Zone and TLZ. Not official sources; costs conflict.
This article is general information, not legal advice. Rules change and vary by state, city and activity, and several points above come from secondary sources, so verify with your regulator. ScrapTrade operates a scrap marketplace and has a commercial interest in the scrap trade.