I wasn't 100% sure on this so I phoned the Local Police and asked them...
Yes you must have a License..FULL UK or Equivelent and the Vehicle being towed must be insured and it must also be in possession of a Valid MOT cerificate and ROAD TAX..
If the Vehicle has NO TAX and or No MOT/Insurance then it can only be moved on a trailer or by a commercially insured recovery vehicle.
Furthermore, the Police Officer I spoke to also advised that most insurance companies will not cover a vehicle to tow another vehicle unless it has FULLY COMPREHENSIVE insurance, and even then standard Car Policies may exclude towing anything other than a BS complient and commercially manufactured trailer that does not exceed the towing capacity of the vehicle. Most Cars will exceed the towing capacity of cars.
If you've ever seen how quickly, and how badly, things can go pear-shaped when someone is towing a trailer when they don't know how to do it properly and/or when the towed item is too heavy or improperly configured then you'd not think that the rules were mad.
In fact, I don't see why there should be, ever was, or should remain any exemptions for any weight combinations of vehicle and trailer.
There should be a separate licence rating and a separate test.