Whether you’re based in a 24-hour urban metropolis or a calm rural idyll, there’ll always be a demand for taxi drivers.


And if you enjoy meeting people and are happy to be behind the wheel for long periods, being a self-employed taxi driver might just be the life for you.


But if you’re a bit nervous about taking the plunge then read on to find out all you need to know about starting out – from finding taxi insurance to keeping the business running smoothly.


Why become self-employed?


There are a number of benefits for the self-employed taxi driver. Number one is that you’re your own boss and can choose when, where and for how long you work.


This gives you great flexibility when it comes to achieving a better work-life balance. Becoming self-employed also lets you reduce your tax bill by claiming back business expenses such as fuel costs and cleaning bills.


However, while being self-employed means you can take a holiday whenever you choose, remember that the amount of money you’ll earn ultimately depends on how many hours you work.


A view of the interior of a car dashboard with a man driving the car on a sunny day

Who can do it?

There are some restrictions and requirements as to who can become a taxi driver. You'll need to:


  • Complete a driving skills assessment
  • Have a full UK or EU driving licence, held for at least 12 months, or three years if working in London
  • Pass background checks
  • Pass a medical check
  • Be over 18 but over 21 in some areas, including London
  • If you're a private hire driver, you'll need private hire and reward insurance. You may also want to take out public liability insurance


Getting started


Most taxi drivers start off by working for a taxi firm so they can learn the ropes and find out valuable information on the trade. You can apply directly to become a taxi driver if you've got a taxi driver's licence. Check out our 10 reasons on why you should become a taxi driver when you are getting started on your journey.


You'll need to meet the registration and licensing requirements of the taxi company you'll be working for and the local authority area in which you'll operate.


You'll usually need your own vehicle. The National Careers Service has some helpful advice.


In terms of skills and knowledge you'll need:


  • Customer service skills
  • Excellent verbal communication skills
  • Patience and the ability to remain calm in stressful situations
  • The ability to accept criticism and work well under pressure
  • Knowledge of public safety and security
  • To be thorough and pay attention to detail
  • To be able to carry out basic tasks on a computer or hand-held device


A person using a mobile phone while at a desk with a laptop set-up

Setting up as self-employed


There are four steps the government advises you to complete before setting yourself up as self-employed.


  1. Check if being self-employed is right for you – self-employment isn’t for everyone as the success or failure of your business falls on you. And remember income can be uncertain. You also won’t get many of the employment protections of those employed by a company such as maternity or paternity rights, holiday pay, sick pay or redundancy.
  2. Choose the name you want to trade under – there are certain rules that you need to adhere to when naming your business. Also, if you want to stop others trading under your name you might need to register a trademark.
  3. Check what records you’ll need to keep – you’ll definitely need records of income (both tips and fares) and expenses.
  4. Register for tax – to pay tax, you’ll need to register for Self-Assessment.



Keep business running smoothly


Marketing and customer service are key parts of making a success of self-employment.


Get business cards designed and printed detailing your services, rates, contact details and anything else you feel could help you secure work.


Keep a ready supply to hand out to customers and others such as pub landlords and hotel owners who might send business your way.


And don’t ignore social media, having an easy to find web page or Facebook account is a great way to secure and build business.


Whether it’s through conversations with customers or online reviews, any customer feedback is useful and needs to be listened to, as it helps you adapt your service and, hopefully, increase profits.


Always be on the lookout for a new target market  – you never know where lucrative new business can come from!


A smartly dressed man writing the word "marketing" in red marker pen onto a glass screen


Managing the financial side of self-employment can be a minefield for those starting out so bear these tips in mind:


  1. Keep organised – whatever happens you need to develop a process by which you can record your fares, tips and expenses. It doesn’t have to be complicated, but you need to be able to match up what you’ve received with what you’ve charged in order to pay the correct level of tax. There are some automated systems that might be able to help.
  2. Record both tips and fares – for tax purposes fares and tips are treated differently so it’s vital you record both separately. If you keep on top of your records you shouldn’t find yourself in a muddle when tax return time arrives.
  3. Check your taxi insurance – providing a service to the public means you need to be fully covered for all eventualities. Talk to the team at Taxi Insurer to discuss your needs.
  4. Expenses – it isn’t all one way when it comes to tax. One of the benefits of self-employment is that you can deduct certain expenses incurred for your business from your income. Thereby reducing the amount of tax you pay. But if you haven’t kept a record of taxi insurance premiums, fuel bills, tolls or cleaning bills you’ll have difficulty claiming them back.


Once you’ve taken the leap into self-employment you’ll have a great time growing your taxi service, increasing your profits and widening your customer base.


The specialist team at Taxi Insurer understands that and has come up with several ways to help. For example, interest-free payment plans are available to make your taxi insurance more manageable alongside your other expenses.


Taxi Insurer has spent decades working with our trusted panel of insurers, so you’ll be in safe hands.


Don’t put it off, get a quote for taxi insurance today and see how much you could save.