How much does it cost to become a taxi driver?


You’re about to embark on a new career as a taxi driver, but what overheads do you need to account for? Read on to find out the main costs you’ll have to lay out before you can start transporting passengers…

What do you need to become a taxi driver?

You’ve made a decision to become a taxi driver, but what do you need to do before you can take to the road? From getting your licence to ensuring you have the right qualifications, there are several things you need to consider before you can start taking passengers:

  • Apply for your taxi driver’s licence
  • Arrange Taxi Insurance to protect you, your vehicle, and your passengers
  • You may need to have a medical exam
  • You might need to take a ‘Knowledge’ or ‘Cabology’ test
  • You may need to prove you have adequate English and maths skills

Ensure you check with your local authority for any specific requirements.

Start-up costs for taxi drivers

There are numerous start-up costs you’ll need to think about before you become a licensed taxi driver. From the initial licence application to obtaining clearance from the Disclosure and Barring Service (DBS), it can end up being quite costly.

Here are the main costs you’ll need to bear in mind:


Cost (Approx.)

Licence application


Skills assessment


'Knowledge' or 'Cabology' test


Enhanced DBS certificate


Medical examination certificate





Again, we recommend checking with your local authority as costs around the country can vary.

You’ll also have to take into consideration the cost of a suitable vehicle, if you don’t already have one.

Cost of buying a taxi

When it comes to the cost of buying a taxi, it can vary greatly – do you go for new or used? It’s important that you do your research, considering some local authorities insist that their taxi drivers own a new vehicle.

While a new vehicle would generally be safer and more reliable, along with being cheaper to run, an older car would obviously be cheaper, and would have a lower depreciation rate.

Find out more about buying a taxi in our dedicated guide.

Cost of Taxi Insurance

The cost of Taxi Insurance depends on a number of factors, including the size of your vehicle and your driving history. Because of the increased number of miles you’re typically driving, insurers may deem you at a higher risk of having an accident, and the cost of your policy may reflect this.



How to reduce the costs of becoming a taxi driver

Becoming a taxi driver involves a lot of upfront costs, including your licence application fee and your ‘Knowledge’ or ‘Cabology’ test. Once you’re set up, there are some ways in which you can keep the costs down, including:

  • Storing your cab in a secure location overnight, e.g. a private garage
  • Keeping your vehicle in good condition, with plenty of maintenance checks

How much can a taxi driver earn?

According to, the average salary for a taxi driver in the UK is just over £19,000, however it’s possible to earn a lot more than that, depending on where you live and how many hours you work.

What expenses can taxi drivers claim?

Taxi drivers are able to claim for various business expenses – to do so, you must first inform HMRC and submit a tax return. To make things easier when the time comes around to fill in your tax return, it may be worth keeping a spreadsheet to record your income and expenses.

Business expenses a taxi driver can claim for are as follows:

  • Fuel costs
  • Repairs to your vehicle
  • Servicing of your vehicle
  • Your annual road tax cost
  • Your MOT test cost
  • Washing and cleaning costs
  • Any registration and licence fees
  • Taxi Insurance

Taxi Insurance

Make sure you get the right cover for your taxi vehicle. Contact Swinton for all your Taxi Insurance needs.


Taxi guides

Read more about becoming a taxi driver including start-up costs and overheads, how to get a taxi driver's licence and key taxi driver laws.

Read more

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