Helping the Taxi Driver to better Self-Employment

By QuickBooks UK

5 min read

No matter where you are in the world, the taxi drivers is in demand, if not in vogue. If you are personable, enjoy driving, and love meeting new people, the life of a taxicab driver might be for you. Some of the benefits include the ability to create your own schedule, claim expenses such as fuel costs and insurance, and get paid immediately after each excursion.

Of course, as with any profession, there are challenges to overcome. Below, we offer some advice on how to steer clear of three common obstacles that a taxi driver might face on their road to success.

1. Getting started

You don’t need any particular qualifications to become a taxi driver, but you must obviously be responsible on the road and you will need to become fully licensed by your local council or Transport for London (TfL) if operating within London.

To do this you must:

  • Provide proof of your right to live and work in the UK.
  • Hold a full UK driving licence or (in London) an EEA driving licence that you’ve held for at least 3 years.
  • Undergo a criminal records check.
  • Pass a medical by a nominated practitioner.
  • Pass a geographical test.
  • Pass a specialised taxi driver test (includes written exam, practical exam, and eye exam).

As a self-employed taxi driver you’ll also need to register with HMRC.

Depending on whether you’re operating a black cab or a minicab (see below), you’ll have slightly different items to consider. For example, if operating a black cab in London, you’ll need to apply for either a green badge, which allows you to operate in city central, or a yellow badge, which allows you to operate in the suburbs. Meanwhile, private hire operators will need their operator, driving, and vehicle licences in order to obtain the Certificate of Compliance, which allows drivers to take bookings.

As far as costs are concerned, you will either need to own your vehicle outright and cover your own costs or rent a vehicle from an operating firm at a fixed rate. Brand new cabs cost around £27,000, but even second hand cabs might set you back several thousand pounds to outfit according to current taxi regulations. Additionally, taximeter installation (mandatory in black cabs) costs between £150-£300.

You might also need to invest in a GPS system, two-way radios, and vehicle upgrades to accommodate disabled passengers. Note that all figures are meant as guidelines only; you should contact your local council for more accurate cost estimates.

For more information, visit Become a Taxi Driver or check out the government’s information on operating out of London.

2. Finding work

The easiest way to blaze a trail as a self-employed driver is to freelance for a private taxi firm. These firms will have a pre-established customer base that you can tap into while you build up your reputation. It should also go without saying that your most lucrative hours will be evenings and weekends—this industry caters to the “night owls.”

How you find works depends primarily on what type of taxi driver you are. There are two types of taxi businesses, both predominantly comprised of self-employed drivers:

First, Hackney Carriage taxis or “black cabs” generally operate out of urban areas. These taxis and the fares they can charge are highly regulated by your local council. Black cabs can respond to flag downs without a prior booking. Many black cab operators form co-operatives in order to run more efficiently and increase profits, but it’s also possible to go at it alone.

Black cabs have a meter installed in them and charge a rate regulated by your local council. As a black cab operator, you can find clients by responding to bookings or by trawling popular hubs, such as busy shopping districts.

Second, private hire vehicles or “minicabs” must have a booking in order to pick up passengers. Minicab operators pay a circuit fee to a minicab company, which in turn handles all of your bookings and schedules your work. Usually, they’ll also let you rent the PDA dispatch systems necessary for communicating with HQ.

Operating a minicab sacrifices a little autonomy for steadier work and less effort on your part—you’re more or less waiting for the phone to ring. Note that while black cabs can respond to private hire bookings, it is illegal for private hire vehicles to respond to street solicitors.

Whether you’re driving a black cab or a minicab, the best thing you can do is build up rapport with your customers. Remember to be friendly and punctual—don’t underestimate the value of referrals when building up your clientele. Also, be sure to display your credentials prominently, to assure your customers that you’re properly licensed.

3. Customers

In 2009, The Guardian published a number of cabbie personal stories, some of which are inspiring… some heartbreaking.

One horror story by Mohammed Fazal is a cautionary tale. He picked up four men in Birmingham city centre, who (he later realised) were clearly intending to rob him. They had their faces covered and they had him drive to a secluded spot, where they stabbed him in the shoulder, stole some money, and fled. Fazal stopped working nights as a response.

On the other hand, one story out of Cornwall, by Emily-Jo Sedgwick, is heartening: she only had one sour experience in seven years—a belligerent customer—and most of her memories are fond ones. She tells the delightful story of ferrying American tourists around and teaching them the proper way to eat fish and chips.

Your customers are both your bread and butter and your greatest risk as a taxi driver. You will almost certainly service drunks and rude patrons.

Sadly, there’s no sure-fire way to avoid unpleasant encounters, but you can try to mitigate the danger to yourself. Whenever possible, refuse jobs that make you feel unsafe and avoid situations that put you at risk.

You may also find a solution in firms such as Maggie Hennessy’s London Lady Chauffeurs, which offers peace of mind for women—both cabbies and customers. This is just one of many female-owned and operated cab companies springing up across the UK that cater exclusively to women who want a little extra security in their commute.

For more information on preventive actions you can take, visit the Health and Safety Executive website. For more help with self-employment, visit our Quickbooks Self-Employed page.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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