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Setting up a Taxi Business and the Legal Requirements

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When you’re setting up a taxi business, you need to think about buying vehicles and hiring drivers. But there are also certain legal requirements that you’ll need to adhere to – not to mention the insurance requirements. Here’s a breakdown of all you need to know about setting up your own taxi firm.

Choosing an office location

Don’t underestimate the importance of a good location for your taxi headquarters as it can make or break your taxi business. If you’re looking to target walk-in customers, your best bet is to set up your office in a public place where you’ll have lots of passing custom. A good place for this could be an out of town supermarket that is difficult to get to on public transport.

Alternatively you could open a headquarters where you answer the phone and delegate jobs to your drivers. This means you won’t have any passing trade dropping in but you’ll have more freedom regarding the location of your office. A good tip if you’re going to be using two way radios to communicate with your drivers is to choose an office that is high up. Your office location will determine the range you get from your base station and while a poor location surrounded by buildings could give you as little a range as 3-4 miles, a good location on top of a hill could give you a 25 mile range.

Taxi driver operating licences

Before you can start running your taxi business, it’s absolutely essential to apply for an ‘operator’s licence’. This is a document that proves that you are an official taxi driver and can be obtained from the local council. There are two types of licences that you can apply for.

A ‘private hire’ licence only allows you to carry out pre-booked jobs – ideal for those who operate from a location that doesn’t encourage passing trade. Alternatively you could get a ‘Hackney’ licence, which also allows you to pick up customers off the street.

Some local authorities impose rules on what type of vehicles are allowed to be licenced, their age and their colour; so before you buy your vehicles you should look into the rules in your area. In most areas your drivers will also need to be licenced by the local licensing authority.


If you’re running a taxi company, taxi insurance is an absolute must and it’s also a legal requirement. The bare minimum insurance policy you’ll need is road risks and public liability insurance, but it’s a good idea to take out a more comprehensive policy to make sure all areas of your business are protected. If you employ drivers, you’ll need to take out employer’s liability insurance in order to protect them in case they are injured at work.

If you operate from your own premises, it’s also a good idea to take out premises insurance in case fire, theft or damage disrupts your business. Just remember that if you’re operating from home, you’re only allowed to use it as a base station; if your drivers will be coming back to your house in between jobs, your business will need its own premises as this requires planning permission.

by David Hambridge