How to Start a Taxi Business in the UK [Licenses & Setup Guide]

If you’ve ever thought, “I could do this for a living” while chatting to your Uber driver or navigating your town better than your sat-nav, a taxi business might be the right road for you. It’s a flexible, in-demand line of work that can bring in steady income, especially if you like working independently and know your way around your local area.

But before you rev the engine, there are a few licenses, choices, and costs to get your head around. 

Let’s start!

Know your options: Private Hire vs Hackney Carriage

First things first: not all taxi services are created equal. In the UK, there are two main types of taxi licenses:

Here’s a quick comparison:

💡 Tip: If you’re starting out solo and want to use your own car, going the private hire route might be easier. You can work with platforms like Uber or Bolt to get customers without setting up your own dispatch system.

Who needs a ride? Understanding the market demand

The UK taxi and private hire market continues to grow, especially in urban and suburban areas where public transport isn’t always reliable. As of 2024, there were over 260,000 licensed taxi and private hire vehicle (PHV) drivers in England alone, highlighting strong and steady demand.

Key customer segments:

What problems are you solving?

💡 Stat to know: In 2023, the UK private hire and taxi market was valued at over £9 billion, with consistent growth driven by platforms like Uber, Bolt, and independent local services

What Licenses Do You Need to Start a Taxi Business in the UK?

Before you can take your first fare, you’ll need to get licensed—and we’re not just talking about a regular driving license. Taxi drivers in the UK must go through a specific process that ensures you (and your vehicle) are roadworthy, responsible, and ready to transport passengers safely.

What you need as a taxi driver

The exact requirements vary depending on your local authority (like TfL in London, or your local council elsewhere), but here’s what you can usually expect:

✅ A full UK driving license (held for at least 12 months)

✅ Enhanced DBS check – to prove you’re safe to work with the public
✅ Medical check – you’ll need to be medically fit, usually assessed under Group 2 DVLA standards (like bus or lorry drivers)

✅ Knowledge or topographical test – in London, this is famously known as “The Knowledge.” Elsewhere, you may just need to demonstrate basic local geography

✅ Right to work in the UK – proof of identity and eligibility

✅ Speaking and understanding English – some authorities may test this, especially in cities

💡 Tip: Don’t skip the small print! Each council has its own process, application form, fees, and timelines. Always check your specific local authority’s taxi licensing page.

Also, from October 2025, TfL will require new and renewing taxi drivers to pass a Safety, Equality and Regulatory Understanding (SERU) assessment.

Licensing your vehicle

Your car can’t just be any car. It needs to meet strict safety and suitability standards. Here’s what most councils will ask for:

✅ MOT certificate – Even if your car is new, you might need more frequent MOTs (every 6 months in some cases)

✅ Insurance – You’ll need specialist taxi insurance, which covers public liability and hire/reward use

✅ Emissions compliance – Especially in London or Clean Air Zones, you may need a ULEZ-compliant or electric vehicle

✅ Vehicle age limits – Some councils won’t license vehicles over a certain age (e.g. more than 5 or 10 years old)

✅ Signage and meters – For Hackney carriages, your vehicle will need a fitted meter and council-approved decals

 Fees to expect (ballpark range):

Choose a business structure and register

Once your licenses are sorted, it’s time to set yourself up as a proper business. You’ve got two main options in the UK:

You’ll also need to:

✅ Register your business with HMRC (if sole trader) or Companies House (if going limited)

✅ Open a business bank account (a must if you’re a limited company)

✅ Choose and register a business name

Need help naming your taxi business? Use ANNA’s free company name checker to see if your name is available or get some alternatives if not!

💡 Bonus: ANNA can also register your business for you in minutes, and keep your paperwork in one tidy place. Less stress, more driving.

How to get customers and grow your taxi business

Once you're legal, licensed, and ready to roll, the big question is: where do your passengers come from? Acquiring those first few customers and then retaining them requires a combination of local expertise, effective marketing, and establishing trust in your service.

Option 1: Join a ride-hailing platform

If you’re starting as a private hire driver, signing up with a platform like Uber, Bolt, or Ola can fast-track your business. These platforms bring in customers, process payments, and handle a lot of the admin.

✅ Pros:

❌ Cons:

Option 2: Build your own independent client base

If you’re going solo or starting a Hackney carriage service, you’ll need to attract your own customers. Here’s how:

Tools and tech to make life easier

Most taxi businesses today rely on a good smartphone setup. Here’s what you’ll want:

Even if you're not working through Uber or Bolt, you can still offer online booking with tools like:

Payments and invoicing

Let’s face it – no one carries cash anymore. Make sure you're set up to take card payments and send digital invoices:

🔎 Want something even more seamless? ANNA offers invoicing and card payment features directly from your business account. You get a unique payment link or QR code, so clients can pay online or on the spot.

Taxes, bookkeeping, and staying compliant

As a taxi business owner, you’ll need to:

💡 The good news? You can take care of all this in one place with ANNA +Taxes.

ANNA isn’t just a business account but an accounting assistant that works behind the scenes while you’re on the road.

✅ All-in-one tax support: From VAT and Payroll to Corporation Tax, it covers everything you need to stay HMRC-compliant.
✅ Automatic tax calculations and filing: It handles PAYE, VAT returns, and Corporation Tax filing, with reminders so you never miss a deadline.
✅ Smart receipt scanner: Snap a photo and the expense is matched to your transaction and categorised.
✅ Pots to save for tax: Every time you're paid, ANNA automatically puts money aside for tax so you’re never caught short.
✅ Tax Terrapin (AI bot): Have a tax question? This ChatGPT-powered bot gives you answers backed by HMRC guidance.
✅ Bookkeeping Score: Get quick tasks to improve your recordkeeping and reduce your tax bill.
✅ Professional invoicing with card payments: Send sleek invoices with your logo and accept card payments via a unique link or QR code.

Starting from just £3/month for the first 3 months, ANNA +Taxes is built for small business owners and drivers like you. It even registers your company and files your Confirmation Statement if you're just starting out.

Final tips and common mistakes to avoid

Starting a taxi business is more than just getting behind the wheel. It’s a real business, and treating it like one from day one will save you stress (and money) later on. Here are a few lessons most new drivers learn the hard way:

❌ Mistakes to avoid

Ready to launch your taxi business?

From getting licensed to tracking expenses, starting a taxi business is easier when you’ve got the right tools behind the wheel. 

ANNA can help you register your business, manage your accounting, file your taxes, and even remind you when deadlines are approaching – all from one app.

Want to drive your business forward with less admin?

Try ANNA today and take the hassle out of running your business.