How to Start a Taxi or Private Hire Business in UK

To establish a successful operation, it's essential to follow a structured approach that includes thorough research, compliance with legal requirements, and effective business planning.

At first, it might feel like there is a lot to figure out. What licenses do you need? How do you attract customers? How much will it cost to get started?

The good news is that it becomes much simpler when you break it into clear steps. This guide will help you understand everything you need to know, from setting up your business to building your brand.

Here’s a quick glimpse of what you’ll gain from this blog:

• Reasons why now is the time to enter the taxi and private hire industry.
• The difference between traditional taxis and private hire vehicles and which might suit you best.
• An easy-to-follow guide to getting the licenses and permits you need.
• Practical advice on choosing reliable vehicles and understanding insurance requirements.
• Tips to promote your services, grow your customer base, and stand out from the competition.
• Key insights on managing your business costs and staying compliant with UK regulations.

By the time you finish reading, you’ll have a clear path to launch your taxi or private hire business and setting it up for long-term success. Let’s jump right in.

What Are Taxis?

Hackney carriages are the iconic black taxis that can pick up passengers from the street or taxi ranks. They are licensed to operate in specific areas and are most common in busy cities like London. Hackney carriages are a staple of the UK’s transportation landscape, providing an easily recognizable and trusted service to customers.

What Are Private Hire Vehicles (PHVs)?

Private hire vehicles, on the other hand, include minicabs and app-based services like Uber, and Bolt. These vehicles must be pre-booked through a company or an app and cannot be hailed directly from the street. PHVs have become increasingly popular due to their flexibility and convenience, especially in urban areas.

Statistics on the Number of Taxis and Private Hire Vehicles

As of recent reports, the total number of licensed taxi and private hire vehicles in England has reached 313,008 as of April 1, 2024, marking an 8.2% increase since 2023. Among these, approximately 256,600 are private hire vehicles (PHVs), which now constitute 82% of all licensed vehicles. The number of traditional taxis stands at around 56,400, reflecting a slight decline of 1.4% over the same period.

The distribution of these vehicles varies significantly by region, with larger cities like London, Manchester, and Birmingham seeing the highest concentrations of both taxis and PHVs. In London alone, there are about 19,000 licensed taxis and approximately 96,000 PHVs, totaling around 115,000 vehicles. These vehicles collectively play a critical role in providing transportation for millions of people each year.

The rise of mobile apps and ride-sharing services has also contributed to the expansion of the private hire vehicle market, with many app-based services seeing significant growth. In fact, private hire vehicles now make up over 80% of the total hire and reward vehicles in some major cities, outpacing traditional taxi services.

This growth trend has been fueled by a robust 10.5% increase in PHV numbers since last year, driven largely by easier licensing requirements and the increasing popularity of ride-hailing services throughout the UK.

For further details and updates on taxi and private hire vehicle statistics in England and Wales, you can refer to the official government publication.

Key Cities with High Demand

Certain cities in the UK have consistently shown high demand for both taxis and private hire vehicles. The most prominent include:

London: The capital remains the largest market for taxis, with over 21,000 black cabs operating, alongside thousands of private hire vehicles. The demand for taxi services in London continues to be high, particularly for tourists, commuters, and late-night transport.

Manchester: A major hub for both private hire and traditional taxi services. Manchester’s growing population, along with its vibrant economy, makes it a key area for mobility services, with high demand for rides at airports, train stations, and popular events.

Edinburgh: With a mix of tourists and local commuters, Edinburgh sees consistent demand for taxis and private hire vehicles. The city’s compact size and reliance on tourist traffic make it an ideal place for both traditional and app-based services.

Other cities with strong demand include Birmingham, Leeds, Liverpool, and Glasgow, all seeing increasing numbers of taxis and private hire vehicles due to urban growth and more consumer preference for on-demand services.

Trends and Opportunities

The UK taxi and private hire vehicle industry is evolving rapidly, with several key trends shaping the future of the market. These changes offer exciting opportunities for new business owners, especially those willing to adapt to consumer preferences and technology-driven solutions.

For example:

Knowing your audience will help you decide what kind of service to offer.

Option 1: Sole Trader

If you plan to drive the taxi yourself and keep things small, operating as a sole trader might be your best bet. You’ll focus on earning directly from rides, keeping costs and admin work relatively low.

Option 2: Fleet Owner

Want to manage multiple cars and drivers? Becoming a fleet owner means higher earnings potential, but it also comes with more responsibilities. You’ll need to think about driver recruitment, vehicle maintenance, and scaling your business.

First, you’ll need a standard UK driving license. If you don’t already have one, this is your first step. Next, apply for a taxi or private hire driver’s license through your local council. This process usually involves a medical examination, DBS (Disclosure and Barring Service) background check, and a test to prove your knowledge of local roads.

In addition to a driver’s license, your vehicle must also be licensed. This involves meeting specific safety and environmental standards. For private hire businesses, you’ll also need an operator’s license, which allows you to accept bookings. Check with your local council for their specific requirements, as they can vary across the UK.

Your vehicle is the backbone of your business, so choose wisely. Look for a car that’s comfortable, reliable, and cost-efficient. Popular choices include the T oyota Prius for its fuel efficiency, the Ford Galaxy for its spacious interior, and the London Electric Vehicle Company TX for its eco-friendly credentials.

Consider factors like fuel type (petrol, diesel, hybrid, or electric), maintenance costs, and how much space passengers and their luggage will need. If you’re planning to serve airports or families, a larger vehicle with plenty of luggage space might be a better fit.

Taxi insurance is different from regular car insurance because it covers you for carrying passengers. This is essential, as standard car insurance won’t protect you in case of accidents involving customers.

There are three main types of taxi insurance to consider. Public hire insurance is for Hackney carriages that can pick up passengers from the street. Private hire insurance is for pre-booked rides. Fleet insurance is designed for businesses operating multiple vehicles and is often more cost-effective if you’re managing a fleet.

A business plan acts as your roadmap. It helps you focus on your goals and figure out how to achieve them. Include details about your target audience, services, start-up costs, and projected earnings.

For example, if you plan to offer airport transfers, your business plan should highlight the high demand for this service and outline how you’ll compete with existing providers. If you’re focusing on local commutes, detail how you’ll promote your services to residents.

Having a clear plan will also make it easier to secure funding if you need financial support to get started.

Why do so many taxi businesses invest in this software? Because it works wonders:

Automated Bookings: No more manual scheduling chaos, it’s all handled seamlessly by the system.

Real-Time Tracking: Customers and managers can check exactly where a vehicle is during a trip.

Smart Insights: The software analyzes customer trends, helping businesses make better decisions.

Saves Money: By choosing the quickest routes, it cuts down on fuel costs and wasted time.

Grows With You: Whether you’re running five cars or fifty, the software can keep up.

When choosing software, it’s like picking a phone, you want something easy to use, reliable, and packed with features that suit your needs. Also, don’t forget to maintain your system. Just like cars need servicing, dispatch software needs updates and security checks to keep running smoothly.

Booking Apps and How They’re Changing the Game

Have you ever booked a taxi through an app? It’s pretty amazing how easy it is. You open the app, tap a few buttons, and a car comes to you. These apps aren’t just convenient they’re essential for any taxi business today.

What makes a good app? First, it has to be simple to use. Think about this: would you use an app that makes you dig through menus to book a ride? Probably not. The best apps are quick, clear, and let you choose options like payment methods or the type of ride you want.

Another big thing is safety. Customers want to know their information is protected, whether it’s payment details or personal data. Features like driver profiles and live tracking make people feel more comfortable using the service.

Smart apps also connect with platforms like social media. This way, customers can easily share their experiences or leave reviews. Good reviews bring in more business, and feedback helps companies improve.

If people don’t know about your taxi service, they won’t use it. Marketing is the key to spreading the word. A smart mix of online and offline strategies works best.

Online, use social media platforms like Facebook and Instagram. Post updates, share promotions, and respond to comments. Keep your website fresh and optimized for search engines so people can find you easily when looking for a taxi. A Google Business Profile can also help you attract customers in your area by making it easy for them to find your contact details and reviews.

Don’t ignore offline marketing, though. Flyers, posters, and partnerships with local businesses like hotels or event venues can help you reach customers in your area. For example, teaming up with a hotel could mean consistent ride requests from their guests.

Creating a loyalty program is another great idea. Imagine offering discounts to regular customers they’ll keep coming back, and they’ll probably recommend you to others.

Pricing That Makes Sense

Pricing is a tricky balance. Set your fares too high, and people might look for cheaper options. Set them too low, and you won’t make a profit. Look at what your competitors charge and adjust your prices to stay attractive without losing money.

Be clear about how your pricing works. For example, let people know if there are extra charges for late-night rides or luggage. Offering fixed rates for popular routes, like airport transfers, can also make customers feel more confident about booking with you.

At the end of the day, people remember how you made them feel. A clean car, a friendly driver, and a smooth ride can turn a one-time passenger into a loyal customer.

Train your drivers to be polite and helpful. Equip your cars with little perks like phone chargers or Wi-Fi, small touches can make a big difference. Finally, always listen to feedback. When customers see you care about their experience, they’ll stick around.

ZervX isn’t just another white-label taxi dispatch software provider. We’re trusted worldwide for delivering reliable, innovative cab booking solutions. With us, you get more than just software you get exceptional technical support and a partner committed to your success.

Our platform goes beyond typical Uber clone, Bolt clone, or Lyft clone apps. It’s a world-class white-label solution that equips you with everything you need to run a successful ride-hailing business.

If you have already launched your taxi business in the UK or anywhere else in the world but need a dependable technology partner to take it to the next level, we’re here to help.