I am pretty sure this is the case, but for inter vlan routing the work properly, does there need
to be an IP address set on the VLAN interface? I am fairly sure there does need to be
as it would not know where to route the traffic to otherwise as I dont think the traffic is tagged until it reaches the trunk.
You are correct. You need an IP on the VLAN SVI (virtual interface) to acheive InterVLAN routing (if you are using a Layer 3 switch). If you are using a Layer 2 switch, then you need a router to do InterVLAN routing.
interface VLAN 1
interface VLAN 2
Please make sure that all devices in the VLAN point to these two addresses as their default gateway respectively.
Hope this helps.