How to start a taxi or private hire business in the UK

Search for 'how to start a taxi business uk' and you find two very different trades hiding under one word. A hackney carriage can be hailed in the street or taken from a rank. A private hire vehicle can only carry passengers who booked in advance through a licensed operator. Most new firms start as private hire, because it needs no rank and no meter, and because airport runs, school contracts and account work all arrive as bookings.

This guide covers England and Wales. Scotland and Northern Ireland license taxis under their own laws, with their own forms and fees. If you plan to work there, read the guidance from the council or the department in charge first.

Hackney carriage or private hire: pick your model first

The choice shapes every licence you apply for. A hackney carriage firm licenses vehicles that may stand at ranks and pick up from the kerb. A private hire firm licenses an operator, the business that accepts and dispatches bookings, and every journey must start as a booking. You can hold both kinds of licence, but you may need to apply separately for each.

One rule ties it all together: the driver, the vehicle and the operator must all be licensed by the same authority. A driver licensed in one district cannot drive a car licensed in another district for an operator licensed in a third. Decide where your base will be before you buy a car.

The company behind the cars

Your licensing authority will ask who runs the business, so set that up first. As a sole trader you register for Self Assessment with HMRC; for the tax year that ended on 5 April 2026, the deadline to tell HMRC was 5 October 2026. As a limited company you register at Companies House for 100 pounds online, usually within 24 hours, or 124 pounds by post.

Three tax rules follow you from the first month:

• VATYou must register once your taxable turnover over the last 12 months goes above 90,000 pounds.
• Making Tax Digital for Income TaxSole traders with qualifying income over 50,000 pounds have used it since 6 April 2026. The threshold drops to 30,000 pounds from April 2027 and to 20,000 pounds from April 2028.
• E-invoicingVAT invoices move to structured e-invoices from 1 April 2029. The guide on e-invoicing in the UK explains what changes for account customers.

A booking firm handles names, phone numbers and pick-up addresses all day, so most firms also pay the ICO data protection fee: 52 or 78 pounds a year for most organisations, unless you are exempt. Your site needs a privacy policy as well; see do I need a privacy policy.

Driver licences: who issues them and what they check

Everyone who drives a taxi or private hire vehicle needs a driver licence, including the owner. You apply to your local council, or to TfL if you want to work in London. A driver licence is usually issued for three years.

The authority checks that you are a 'fit and proper person'. Expect a look at your background and character, and often an enhanced check from the Disclosure and Barring Service. You usually need to have held a full British, Northern Ireland or EU driving licence for at least 12 months. Local rules come on top: London taxi drivers, for example, must be over 21. Working without a driver licence can lead to prosecution.

The operator licence and what it lets you do

A private hire operator licence is granted by the district council for up to five years. It is the licence that lets your business accept bookings, which means it is also the one that carries the record-keeping duties.

The law allows an operator to pass a booking to another licensed operator. That matters on a busy Friday night: if your own cars are full, you can still keep the customer, as long as the subcontract goes to a licensed operator and your records show it.

Records you must keep for every booking

The operator must record every booking before the journey starts. The statutory standards for taxi and private hire licensing ask councils to make operators keep those records for at least six months, and to keep a register of staff who take bookings or dispatch cars, with a basic DBS check for each.

Paper diaries make this hard to prove. A booking system on your website that stamps each booking with the time it arrived, and a work order app that shows the driver and car, give you an audit trail without extra typing.

Cars, insurance and clean air charges

Every car needs its own vehicle licence from the same authority as your drivers and operator licence. Councils set their own vehicle standards, so check the age, size and inspection rules before you buy.

Once you employ staff, employers' liability insurance with cover of at least 5 million pounds is a legal requirement. In London, a car that does not meet the ULEZ standard and is not exempt pays 12.50 pounds a day. Add that to your fare maths before you sign for an older car, and keep tax, inspection and insurance dates for every vehicle in one fleet overview.

Drivers on your books or on their own account

Many private hire firms work with self-employed drivers who rent a car or bring their own. Others employ drivers on a wage. The label you put on the contract does not decide it: HMRC looks at how the work really runs, and its employment status tool helps you check each arrangement before you sign. Get it wrong and you may owe tax and National Insurance you never collected.

Employed drivers bring their own rules. The National Living Wage is 12.71 pounds an hour from April 2026, and time spent travelling between jobs counts as working time for minimum wage purposes. Holiday is 5.6 weeks a year for full-time staff, and the weekly limit is 48 hours on average unless a driver opts out. Plan shifts in a staff scheduling tool so rest breaks and hours stay visible, and use the break-even calculator to see how many paid journeys a shift needs before it covers the wage. Firms that grow past a handful of cars often want their dispatch, records and invoicing in one system; that is where custom transport software starts to pay back.

Your first thirty days as an operator

A realistic sequence for the first month looks like this.

1. Week 1. Register the company or sole trader status, open a business bank account and pick your licensing authority.
2. Week 2. Apply for your driver licence and DBS check, and for the operator licence. Read the council's vehicle policy before buying.
3. Week 3. License the first vehicle, arrange insurance and set up a booking record that meets the six-month rule.
4. Week 4. Put your site and your Google profile live, publish fixed fares for the routes you want, and contact hotels, schools and offices nearby.

Council processing times vary widely, and DBS checks can add weeks. Use the waiting time to line up account customers: a care home that books hospital runs, a hotel that needs early airport transfers, or a firm that sends staff between sites. Each of those wants a monthly invoice rather than a card payment per ride, so agree the payment terms in writing and check whether they want a purchase order number on every invoice.

Winning the first bookings

People choose a taxi at the moment they need one. Someone searching for an airport transfer tonight rings the first number with good reviews. Start with your Google Business Profile, set to the area you are licensed for, and ask every happy passenger for a review; the guide on getting more Google reviews shows how.

A site of your own then does what the profile cannot: show fixed fares per route and take bookings in advance. A website from VBS starts from 1,500 euro, and the guide to website costs in the UK shows what drives the price. If you want to see how we plan and build one, read about our website design work. For pricing per mile and per hour, the margin calculator helps you check each fare covers fuel and wages.

Your next step

With licences in hand and a booking record that meets the rules, the cars can roll. What separates a busy operator from a quiet one is how fast you accept, dispatch and invoice. Our page for taxi companies shows how a booking form, a job sheet on the driver's phone and a dispatch board work together, so your records fill themselves.