7 Things to Consider Before Becoming a Taxi Driver


Becoming a taxi driver is a great way to earn extra income or go into full-time work for yourself. A taxi is a small business that has the potential to earn up to £40,000 a year for full-time drivers in cities and towns across the country.

Still, as with any business, there are rules and regulations that you need to follow when you’re starting up as a taxi driver. Here are eight things you need to think about before you take your first paying customer.

Which Type of Licence Should You Choose?

A full UK driving licence is the first step in getting licensed to operate a taxi, but in most cases, you’ll also need a taxi licence.

Every council has its own taxi licences that allow drivers to operate in their area. Most councils offer two types of licence, a Private Hire Vehicle licence or a Public Hire licence, also known as a Hackney Carriage licence.

With a Private Hire Vehicle licence, or PHV, a driver can pick up customers only from pre-arranged jobs, such as those booked over the phone or via a mobile app. Drivers who have a Hackney Carriage licence, on the other hand, can operate from designated ‘ranks’ in the area, where they can wait for customers or can be ‘hailed’ by customers on any street they are driving on.

Will You Work with a Private Hire Company?

Drivers who have a PHV licence will almost certainly work with a Private Hire company. Here, customers will call the company or perhaps use an app on their phone to book a taxi. This booking is then distributed by the company to drivers working for them. The driver closest is normally the driver that gets the job, though different companies have different rules.

Drivers with a Hackney Carriage licence can also work for Private Hire firms, while also utilising their licence to pick up from ranks or on the street, though not every council allows this so you should check with your local authority.

Find the Right Vehicle

Different councils have different rules regarding what type of vehicles can operate as taxis in their area. The main criteria will usually be age and size.

Councils will often only allow cars that are less than 10 years old to operate as a taxi, sometimes less, and they will grant a taxi licence to small, two doored vehicles.

Fuel consumption should be a primary concern when choosing your car – a  thirsty car will cost you a lot of money to run, eating into your profits. Many drivers are now turning to hybrid vehicles to reduce fuel costs and increase their profit margins on every journey.

Look for Specialist Taxi Insurance

Taxi drivers require specific insurance to make sure they are fully covered in the event of an accident. Taxi insurance offers similar coverage to regular car insurance, but includes a ‘hire and reward’ component that will pay out if your passengers are injured or their belongings are damaged during a job.

You can visit quotezone.co.uk to find out more about taxi insurance. Quotezone.co.uk compares prices across a wide range of insurance companies, which means you may also be able to find a cheaper taxi insurance policy when you use their comparison service.

Are There Additional Qualifications You Need?

Many councils will require drivers to pass a ‘knowledge’ test of the local area, to ensure they can get their customers efficiently from A to B. These tests can sometimes be quite demanding, even for people who have lived in an area their whole life, so this is definitely something you should enquire about.

Have You Consulted an Accountant?

Becoming self-employed will mean you will be responsible for completing your own income tax and national insurance payments through the Pay As You Earn (PAYE) system. You will also have a number of tax incentives available to you, with many drivers able to claim a return on VAT paid on fuel used to operate; often to the value of thousands of pounds.

Taxi drivers can also find themselves eligible for tax credits in their first years to help them start their business, so it is definitely worth consulting an accountant to see what is available to you.

Being a taxi driver can be incredibly financially rewarding, as well as offering the chance for you to start your own business. With some careful planning, anyone can get the qualifications, vehicle and taxi insurance they need to become a taxi driver.


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