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Home / How-To's / How to Start a Taxi Business in the United Kingdom (UK)

How to Start a Taxi Business in the United Kingdom (UK)

It is not easy to start and run your own taxi or private hire business. This is due to the fact that different parts of the United Kingdom have different rules and management styles.

In 2005-2006, the private hire and taxi industries were worth approximately £2.6 billion. In the United Kingdom, over 500,000 people own automobiles. The number of people using taxis has steadily increased over the last 20 years. Now, 32% of people take a taxi at least once a month, up from 16% in the mid-1980s.

What is the distinction between taxis and private hire vehicles?

Despite the fact that both taxis and private hire vehicles transport paying customers to their destinations and assist them with their luggage, there are significant differences between the two.

Hackneys

Without making a reservation, Hackney Carriage taxis (also known as “black cabs”) can pick up people who flag them down on the street. The majority of black cabs are found in cities, and there are strict regulations governing how much they cost and how many can be on the road at the same time.

People who drive black cabs are mostly self-employed, and they must pass a series of checks and tests to obtain their license. Some Hackney Carriage drivers band together to drive sedans and MPVs. Most Hackney drivers, on the other hand, prefer the traditional London-style MetroCab or LTI’s TX1 and TX2 vehicles.

Rent-a-Car

Private hire vehicles, also known as “minicabs,” must have a reservation when picking up passengers.

A minicab owner will be charged with a crime if they are caught advertising their business or acting like a Hackney or Taxi.

Most private hire drivers are self-employed and pay a “circuit fee” to a minicab company to take bookings and set up their work schedules. The call center is charged by the minicab company, and if they have computerized booking and dispatch software, they will almost certainly rent radios and even offer data terminals or PDA dispatch systems.

You can get a license to drive a black cab and go it alone if you want to work for yourself, make money, and avoid paying minicab circuit fees. Some black cab drivers join forces with other drivers to make more money and run their businesses like small businesses. Computer Cabs was based in London on a small fleet of black cabs. They now have over 3,500 taxis and take between 10,000 and 20,000 reservations per day. They also have one of the city’s most sophisticated computer booking, dispatch, and data systems. They can accept credit cards and use GPS to track their vehicles.

It is possible to combine fleets. If street hires are too slow, Hackney Carriages can handle private hires. However, it is illegal for private hire vehicles to stop if a member of the public attempts to hail them.

The regulations and laws

There are over 400 council licensing authorities in the United Kingdom. Because there is no centralized authority, the rules for each council will differ depending on how they run things. There are, however, some fundamental rules that all authorities must follow.

Private hire car regulations

Minicabs had a bad reputation in the past because there were no rules governing how they operated. Bad drivers would pick up lost passengers and charge exorbitant fees or even injure them. Every week, it is estimated that at least one woman is raped in an illegal London taxi. This is a shocking figure that reflects poorly on the industry.

Some taxi booking and dispatching systems include features such as “Text back,” which sends an SMS to the passenger just before the private hire vehicle arrives with the vehicle’s registration number, a description of it, and the driver’s name. Women are more likely to like you if you have these important passenger safety features.

Prior to the Private Hire Vehicles (London) Act of 1998, the Public Carriage Office was only in charge of licensing black cabs. The Public Carriage Office was given control of minicabs and private hire under this law.

Minicab and private hire companies must now have a private hire operator license before they can accept bookings. Your company will be unable to conduct business without one. To obtain a license, you must demonstrate that you are “fit and proper.” This will work against you if you have been convicted of a crime, declared bankruptcy, or violated health and safety regulations.

You should also show that you have any necessary radio licenses or insurance papers, and you should thoroughly inspect the vehicles and papers of your drivers. Some software programs maintain a complete record of all driver and vehicle paperwork and automatically block drivers whose paperwork has expired. For more information on the Diplomat Navigator product, visit the website listed at the bottom of this article.

A licensing officer may visit your home if it is your primary place of business.

The application fee will be charged by the local government and will be valid for five years.

Private-hire cars are not required to have meters, but they can if they wish. If they are installed, they must demonstrate that they are legal when the vehicle is inspected for road safety three times a year. A private hire or minicab company can charge whatever they want.

Unless there are exceptional circumstances, the vehicles must be less than 5 years old. Drivers must have held a full EU license for at least 12 months, pass a medical exam, and disclose any criminal convictions. Drivers in some areas, like those who want to drive a black cab, must pass a “knowledge” test.

Hackney carriage regulations (also called “black cabs”)

You must follow certain rules if you want to take a black cab on your own. You must be at least 21 years old, have a full EU driver’s license for at least a year, and be capable of driving a taxi. You will be required to demonstrate that you are “fit and proper,” and the criminal records bureau will conduct a background check on you. (You may not be automatically disqualified for minor offenses.) and will require a thorough examination; there may also be a “knowledge” test.

In London, there are a few more rules regarding black cabs. You must choose between applying for a “green badge,” which allows you to drive in central London, and a “yellow badge” (which allows you to operate in the suburbs.)

The Public Carriage Office allows applicants two years to pass the central London test and six months to pass the suburban test.

Training

There is currently no mandatory training program, but in 2000, the Intermediate Certificate in License Education for Taxi and Private Hire was created to provide drivers with a nationally recognized qualification.

Call 0191 296 0814 for a training program.

Contacts that are useful

The National Private Hire Association is made up of over 400 private hire companies. To find out what they can do for you, call 0161 280 2800.

If you want to drive a taxi, you should first inquire with your local government about the fees. You can also seek assistance from the Licensed Taxi Drivers Association.

Start-up costs

The costs of starting your own taxi business, like most things in the taxi business, are heavily influenced by where you live and the type of taxi you drive (black cab or private hire). You should talk to your city council to get exact numbers, but you can work with some good estimates.

The cost of a hackney carriage

The Disability Act mandates that black cabs have wheelchair access and induction loops for the deaf. The compliance date has been delayed pending a government announcement.

To keep up with the new rules, though, it could cost you several thousand pounds to make changes to used black cabs. At the moment, a brand-new manual cab costs £25,000 and an automatic cab costs £27,000.

Hackney Carriages must have taximeters, which cost between £150 and £300 and can be rented out on a monthly or yearly basis. Use the link at the bottom of the article to get in touch with Diplomat.

In addition to the cost of a license, drivers also have to pay for a driving test and a test of their knowledge of the area. Again, these costs vary by licensing body. The cost doesn’t end there, though. A medical exam will set you back between £60 and £80.

Price of a private hire

As with Hackney Carriages, the costs of getting your private hire fleet on the road will depend on which licensing authority you are dealing with. Before you can get your Certificate of Compliance from the council, which lets you start taking reservations, you will need to pay for operator, driver, and vehicle licenses.

A license for a private hire operator costs between £250 and £300, and a license for your vehicle costs between £75 and £300. Your driver’s license will cost between £25 and £200.

Insurance

You have to have insurance, Minicabs must insure their cars, drivers, and third parties (passengers), and they can get private hire insurance. Your operating center (if not your home) and equipment (radios, GPS, PDAs, computer booking and dispatch systems, etc.) should also be insured.

Premises

This can be any building that complies with Health and Safety and has equipment licenses.

If you’re using a VHF two-way radio, choose a site on high ground to maximize coverage. Before you talk to landlords, some companies will provide computer coverage predictions. Diplomat.co.uk is the place to go for more information about this service.

Customers who prefer to walk in and book should be able to do so easily.

What’s needed?

Modern cab companies have state-of-the-art radio equipment that integrates with GPS so vehicles can be tracked on booking and dispatch computers using bespoke dispatch software to coordinate jobs and vehicles. Job details can be sent digitally to the cars’ pocket PCs or texted to the driver’s phone. This allows a few office operators to control a large number of cars and prevents confusion when people have different accents. Once vehicles have Pocket PCs, drivers can choose Tom Tom and Destinator navigation systems.

Licensed radio

Almost all private hire firms have radio communication, from simple hand-held devices to complex computerized systems that can track and interact with drivers. Before deciding, you must get an Ofcom license.

Depending on fleet size, the license costs £5 to £10 per car per year.

Radio equipment

Small operators may prefer to use mobile phones instead of two-way radios.

A long-term, two-way radio is more cost-effective than mobile phones because there is no monthly line charge.

Get the right equipment for your area. VHF is best for long-distance, straight-line communication. Many cheap radios are not data-compatible. Diplomat 01256 381656 for data compatibility info.

To cover a wider area, you’d need to lease a line on a phone mast. NTL and Crown Castle lease space on their transmitters to local operators.

Innovation

With new technology, you can track your cars using software that knows the destination address and ranks them when clear. GPS can be used to pinpoint a car, and jobs can be sent digitally to onboard computers or mobile phones.

High-tech software and GPS systems were previously out of reach for most start-up minicab firms, but now firms like Diplomat offer startup packages for less than £1.00 a day. This package integrates with SMS dispatch or vehicle data systems with GPS for under £300 per vehicle.

Once your fleet has a data system, you can text them pick-up details and more. The drivers have five or six standard responses, from ‘Picked up and on our way to ‘Help! I’m being attacked!’

Profitable

Having the right equipment and licenses doesn’t guarantee your private hire firm’s success; public perception can make or break your business, so get it right.

Word-of-mouth is crucial. Carding is also very important. Most customers judge a minicab or private hire company after one ride, research shows.

Even if you operate two cars out of a spare bedroom, if your drivers make a good impression, you could build a loyal customer base and add more drivers and vehicles.

Promptness, courtesy, and competitive pricing are key to building repeat customers, so invest in booking and dispatch software and be polite on the phone.

A good way to attract customers is to offer internet bookings and text bookings. This appeals to the younger generation because they can book entirely by SMS. Modern booking and dispatch software will instantly translate the text to a job and bypass the telephonist.

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