Starting up a taxi or private hire business?

Small Business Advice 28 September 2011

taxi business

If you plan to start a taxi or private hire business then there are a number of things you should know and some regulations you should be aware of. This brief article aims to explain a few of them in more detail. First, you must determine if you want to run a taxi business or a private hire business as there is a difference.

Taxi driving

Most taxi drivers are self-employed and are given the opportunity to work wherever and whenever they like. If you’re going to be a taxi driver then it’s also a good idea to consider working with other drivers to form a co-operative, or perhaps work for a larger taxi company and remain self-employed. Working for a large taxi company can often provide you with a lot of work, and so it’s a preferred option for many drivers who are just starting out.

There are some regulations with taxi driving however and you must adhere to them:

  • You must have held a UK driving licence (or EE/EEA) for a minimum of a year
  • Your taxi cannot have any more than eight passenger seats
  • You will need to apply for a licence to operate as a taxi

It’s important to remember that many of the licensing agencies in the individual districts and boroughs throughout the UK can set their rules in accordance with the local community needs and this includes setting the standard fare too. If you are to operate within a particular area you must consider this and contact the individual councils before you do anything else.
The process is a little different if you want to become a taxi driver in London. This requires you to pass “The Knowledge” which is a test specifically designed for London and it usually takes several years to complete.

Private Hire

Private hire businesses cover a much larger range of vehicles and follow an entirely different business model. This business model allows you to have anything from a minicab to a monster truck. You can have fleets of them or just one or two. If you have more than one vehicle in your private hire business you will usually employ a selection of drivers too. Although the business model is more complicated, a private hire business can be more lucrative.

The main feature that separates the taxi from the private hire is that private hire vehicles are pre-booked. If you see a private hire vehicle on the street it’s very likely that it’s on the way to a booking or returning from one; your chances of hailing it will be very slim indeed. All drivers of private hire vehicles will need to have a valid UK driving licence and be registered with the local borough, and all vehicles will also need to be licensed to carry passengers. Perhaps most importantly, is the fact that if you run a private hire business you too will need a licence to operate the business, whether you drive or not.


The great thing about either one of these simplified business models is that both of them are necessary and there is likely to be an ample supply of work. Although there are a number of regulations you need to adhere to, nothing is too complicated and as long as you follow the rules you can set up a business like this quite quickly. Once you are set, have a look at our mobile taxi payment solutions which enable you to accept card payments while on the move.


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