What does it cost to be a taxi driver?

Inverness bridge

When you are launching any business, you need to know how much it will cost to start up. The price of buying a vehicle for any job is a major expense, but for taxi drivers, the start-up costs don’t end there.

Once a driver has found a suitable vehicle that is affordable to buy and economical to run, they need to decide what type of taxi business they will be operating – public hire or private hire.

When a driver has obtained their public hire insurance or private hire insurance, they must be licensed by a local authority. As we have seen recently, some private hire drivers have their taxi licence with one authority but work in another area.

Cost of living

Whevever their taxi licence is held, the cost of living varies between towns, cities and counties, and taxi drivers must work out whether they can earn a living.

To help, taxi insurer Zego has looked at the cheapest place in the UK to launch a taxi business and has found that it is Inverness, in the Scottish Highlands.

Zego examined the administration costs required to setup as a taxi driver in each UK city. In addition to taxi insurance and a three-year taxi licence, it took into account the initial cost of a Disclosure and Barring Service (DBS) certificate and the average cost of petrol per litre.

As happily reported by the Inverness Courier, Zego found that start-up costs in Inverness – excluding the vehicle – are the cheapest in the UK at £853.87, followed by Hereford at £893.45 and Aberdeen third with £919.60.

There is a jump of more than £200 to set up in Birkenhead which costs £1121.16 and is the 10th cheapest area to launch in.

At the other end of the table, Zego found that London is the most expensive city to set up a taxi business, with drivers having to fork out £1,856.79 to get their business off the ground.

This was followed by Wakefield with a cost of £1,828, and Bradford in third with £1,714.55.

The 10th most-expensive city is Wigan with £1,536.30, which is still £415.14 more expensive than Birkenhead – the 10th cheapest.

While Scotland is home to the cheapest city to set up in, it also has one of the most expensive, with Edinburgh in fifth with £1,697.19.

Zego CEO Sten Saar said: “Today taxi drivers are an essential part of society, transporting members of the public daily.

“In recent times, taxi drivers have felt the brunt of inflation across the UK, therefore will are looking for ways to reduce their outgoings – and there are several ways to do so.”

While some taxi drivers might be able to relocate to Inverness or another of the lower-cost areas, most will have to stay where they are and find other ways of bringing down their costs.

Zego suggests using app-based technology to demonstrate how they drive, rather than average driver factors such as age, location and claims history. It says safe drivers will be rewarded with cheaper policies.

It also recommends changing driving habits to reduce fuel consumption, such as accelerating smoothly and maintaining steady speeds.

Looking after their vehicle is another key point, especially if it helps reduce mechanical failure, so regular maintenance and preventative work are essential.

On a different tack, Zego encourages taxi drivers to be aware of tax deductions they may be entitled to and urges them to note all expenses related to their business and vehicle, including fuel costs, vehicle maintenance and insurance premiums.

And finally, taxi drivers should shop around for taxi insurance, especially using taxi insurance brokers who will be able to find the best cover at the best price.

Information correct at time of publication. Information provided within this article may have changed over time. No responsibility for its accuracy or correctness is assumed by John Patons Insurance Services or any of its employees.