How to Start a Taxi Business in the UK

How to Start a Taxi Business in the UK

If you’ve got a car, a clean licence, and more patience than the average sat nav, starting a taxi business might sound like a smart move. Whether you’re thinking of going solo as a private hire driver or building up a fleet of vehicles, the UK taxi industry is a busy one — and for good reason. People always need transport. Trains get cancelled. Ubers don’t always show up. Nights out still end with, “Shall we just get a cab?”

But this isn’t just about driving people around. Running a proper taxi business means dealing with licences, insurance, regulations, and the joys of 2am pickups from kebab shop curbs. So before you slap a sign on the roof and start quoting fares, here’s what you need to know.

What Is a Taxi Business?

A taxi business involves transporting paying passengers in exchange for a fare — either in a public hire vehicle (a classic black cab you can hail on the street) or a private hire vehicle (pre-booked cars, like minicabs or rideshare services).

Most new drivers start with a private hire setup — working under a local operator’s licence or going independent if they want more control. A taxi business can be just you and your car, or a full operation with multiple drivers and vehicles, either owned outright or leased.

In short: you get people from A to B, legally and safely, in exchange for a fee. But the “legally” part is crucial — this is a highly regulated industry, and for good reason.

How Does It Work?

You pick up passengers, take them where they need to go, and get paid for your time and mileage. But behind the wheel, there’s a bit more going on.

You’ll need a vehicle that meets local licensing requirements, proper insurance, and licences for both the driver and the vehicle. If you want to operate independently — meaning you take bookings yourself — you’ll also need a private hire operator licence.

There’s also the question of how you get work. You could sign up with an existing operator or app-based platform like Uber or Bolt, which handle bookings and payments (for a cut, obviously). Or you can market yourself directly, build up regular clients, and take bookings by phone, app, or online.

You’ll also need to manage admin — receipts, bookings, taxes, fuel, maintenance, and the ever-present paperwork. And don’t forget customer service. Being polite, punctual and professional goes a long way — bad service travels fast, especially in local Facebook groups.

What Licences and Insurance Do You Need?

Let’s start with the legal stuff. You must have a taxi or private hire licence from your local council to operate legally. You’ll need:

• A Private Hire Driver Licence (or Hackney Carriage Driver Licence for street-hail cabs)

• A Private Hire Vehicle Licence for your car

• A Private Hire Operator Licence if you’re taking bookings yourself

To get these, you’ll usually need to pass a background check (DBS), a medical exam, a local area knowledge test (especially in places like London), and sometimes a basic English test. The requirements vary depending on your local authority, so always check with your local council.

You’ll also need Hire and Reward insurance, which covers you for carrying passengers for money. Standard car insurance won’t cut it — if you drive without the proper cover, you’re breaking the law.

What Are the Benefits?

A taxi business offers flexibility. You can work when you want, set your own hours, and scale it up or down to suit your lifestyle. It’s great if you like meeting people, enjoy driving, and want a business that gets you out and about.

There’s constant demand — people always need lifts. From school runs and airport transfers to work commutes and nights out, transport is an essential service. If you build a good local reputation, you can get repeat bookings and referrals that keep your calendar full.

And if you’re thinking bigger, it’s a business you can grow. Start solo, then add more drivers, lease more cars, and build your own local private hire firm.

What Are the Drawbacks?

It’s not always as easy as it looks. The taxi business has a lot of competition, especially from ride-hailing apps that undercut prices. You’ll need to work hard to stand out — and that might mean longer hours or taking less desirable shifts (hello, Friday 11pm).

The job can be unpredictable. No-shows, drunk passengers, peak-time traffic, and last-minute bookings all come with the territory. If you’re not good with stress or tight timing, this might wear you down.

Licensing and insurance costs can also be steep. You’ll need to budget for fees, MOTs, vehicle inspections, and possibly dash cams or GPS systems. And don’t forget self-employment tax if you’re working for yourself.

Also: your car is your office. That means wear and tear adds up fast — tyres, brakes, valeting, the lot. If your car’s off the road, so is your income.

Summary

Starting a taxi business in the UK can be a great way to earn independently — whether you’re after a full-time income or a flexible side gig. But it’s not just about driving. You need the right licences, insurance, attitude, and customer service game. If you’re organised, patient, and can keep calm under pressure, there’s real money to be made.

Like any service business, it rewards consistency and reputation. Do it right, and you’ll have a solid, steady business that runs as long as you’re willing to keep the engine ticking.