How Much Does It Cost to Become a Taxi Driver in the UK?

For many people in the UK, becoming a taxi driver is a great job choice because it lets you set your own hours, make decent money, and be your own boss. But before you get behind the wheel, you need to understand how much it will cost to get a licence, buy a car, and run your new business. This guide gives a full list of all the charges that come with becoming a taxi driver, such as getting a licence, buying a car, getting insurance, and paying for things that come up regularly.

What Do You Need to Become a Taxi Driver in the UK?

There are a number of things you need to do before you can start driving people about to make sure you have a licence and are ready to drive safely and lawfully.

Taxi Driver Licence: Every taxi driver in the UK needs to have a licence. The PCO (Public Carriage Office) licence is what this is called in London. Other areas have their own systems set up by local municipalities. There are background checks, medical exams, and a number of tests as part of the application procedure.
Taxi Insurance: Taxi insurance is required to keep both the driver and the passengers safe. The cost of insurance changes based on things including the size of the car, the driver's history, and where they live.
Medical Exam: You need to take a medical test to make sure you are fit to drive, especially if you are older.
The Knowledge or Cabology Test: You have to pass the famed Knowledge test in cities like London. A Cabology test may be needed in some places, but it is usually easier.
Prove English and Maths Skills: Drivers may need to prove their English and mathematical skills, which is usually done by a standard test.
Criminal Background Check: You need to have a DBS check to make sure you don't have a criminal past.

Initial Licensing Costs

There are a number of steps and fees involved in getting a taxi licence in the UK. Prices can be different in different locations of the UK, especially between London and the rest of the UK. Here is a list of the usual costs:

Application Fee: The first charge for applying for a cab driver's licence is different for each council. In London, for instance, the cost of a private hire licence is about £124.
Licence Grant Fee: The grant fee for a three-year PCO licence in London is about £186.
Topographical Skills Assessment: If you want to get a TfL (Transport for London) licence, you will need to take a topographical skills test. This costs £36.
ID Badge: Getting an ID badge costs about £6.
Medical Fitness Test: A medical fitness test, which is a medical check that meets DVLA Group 2 standards, usually costs between £80 and £150. Most cab drivers have to do this step.
English Language Proficiency Test (SELT): I If you can't show that you know English at the GCSE level, you'll have to take the English Language Proficiency Test (SELT), which costs £180.
Enhanced DBS Check: This background check is needed to make sure you don't have a criminal record. The price is about £52, plus some extra expenses for paperwork.

Total Start-Up Costs: £531 (for basic licensing fees and exams)

How Much Does It Cost to Buy a Taxi?

One of the main expenses involved in becoming a taxi driver is buying or leasing a vehicle. Your entire initial costs will be greatly affected by the choice of whether to buy new, buy used, or lease a vehicle.

New Vehicle: If you decide to buy a new car, especially a hybrid model like the Toyota Prius or Hyundai Ioniq, expect to pay between £22,000 and £30,000. These vehicles are reliable, fuel-efficient, and meet the UK's emissions rules for use of taxis.
Used Vehicle: A used taxi, typically one that meets the PCO criteria, will cost between £9,000 and £18,000. While used cars are cheaper, they may require more frequent maintenance, which could add up in the long run.

Vehicle Acquisition Options

Rent-to-Own: For drivers who don’t want to pay the full upfront cost, a rent-to-own plan can be a good choice. Weekly payments range between £190 and £250 for a 24 to 48-month agreement. The driver gets the ownership of the car at the end of the contract.
PCO Car Hire: If you decide not to commit to full ownership, you can hire a PCO-approved vehicle. Weekly hire costs range between £180 and £265. This generally includes insurance and other associated costs, making budgeting easier.

Insurance Costs for Taxi Drivers

Insurance is a non-negotiable cost for taxi drivers in the UK. The cost of insurance varies depending on the size of your vehicle, your driving history, and the location where you drive.

Public Hire Insurance: This type of insurance typically costs between £1,600 and £3,500 annually. Drivers who pick up passengers without making a reservation are called public hire drivers.
Private Hire Insurance: Drivers who pick up passengers by appointment should expect to spend between £1,600 and £1,800 a year.
Public Liability Insurance: This is also required by law and costs between £50 and £500 a year.

Ongoing Costs for Taxi Drivers

Taxi drivers have to think about more than just the expenditures of getting a licence and buying a car. They also have to think about the costs of running their business. These are:

Vehicle Maintenance: To keep the car in good shape, it needs to be serviced, repaired, and tested for a MOT on a regular basis. Depending on how well the car is maintained and how many miles it has, maintenance fees usually run from £100 to £250 a month.
Fuel or EV Charging: The cost of petrol depends on the type of car. If you drive a regular petrol or diesel car, you may expect to pay between £80 and £160 a week. Charging an electric vehicle (EV) is usually cheaper, however it varies on the model.
Dash Cam Installation: Dash cams give an extra layer of security and are especially good at stopping false claims. A basic dash cam costs between £70 and £120, but a TFL-approved dual-facing unit can cost between £180 and £300. Three-channel dash cams that cover the whole 360 degrees cost between £350 and £500.
Platform Commission Fees: Platform Commission Fees: When you use a rideshare service like Uber or Bolt, they usually take 20% to 25% of the fare as a commission.

Income Potential for Taxi Drivers

The income of a taxi driver depends on various things, including the location, working hours, and whether you own or lease your vehicle.

Gross Weekly Earnings: Full-time taxi drivers can earn between £800 and £1,200 per week, with those in major cities like London potentially earning up to £1,400 per week, especially if they work longer hours and charge more at peak times.
Monthly Earnings: The average Monthly gross earnings typically range from £3,500 to £5,200.
Net Income: After deducting costs like vehicle maintenance, insurance, and fuel, net monthly earnings can range from £2,100 to £2,800 if leasing the vehicle, and £2,500 to £3,600 if owning the vehicle.

Conclusion

In the UK, becoming a cab driver involves a lot of money up front, but the potential for a steady income can make it a worthwhile career choice. The costs can range from £531 for basic licensing to £30,000+ for purchasing a new PCO-compliant vehicle. While the upfront costs are substantial, the flexibility of earning a good income, particularly in high-demand cities, can make the financial outlay worthwhile in the long term.
If you're considering becoming a taxi driver, be sure to factor in all the costs involved, both initial and ongoing. Understanding these expenses upfront will help you plan for a successful career on the road.