Commission or weekly rent: how should a taxi firm charge its drivers?

How you charge your drivers decides what lands in your bank each week and what a driver says about you on the rank. This guide compares the two ways UK firms charge, commission and weekly rent, from both sides: how each one feels to a driver in a busy week and a quiet one, the break-even sum, your cash flow, the employment status and VAT points, and how to switch without losing people. The figures in the examples are made up for the sums. They aren't market rates, and no reliable figure for what UK firms charge is published.

What's the difference between commission and weekly rent?

Commission is a share of each fare. Weekly rent is a fixed sum for access to your work, whatever the driver takes. The trade calls rent by other names too: settle, circuit fee, radio rent.

• Commission per job. You take a percentage of each fare. On card and account jobs you hold the money, so you deduct it before you pay the driver. On cash jobs the driver holds the money and owes you your share.
• Weekly rent. The driver pays a set amount each week for your bookings, and keeps every fare. A quiet week costs the driver the same as a busy one.
• A mix. A lower rent plus a smaller commission, or rent on cash work and commission on account work. A mix spreads the risk between you.

If you supply the car, keep the car hire separate on paper from what you charge for the work. Drivers compare the two separately, and HMRC's VAT notice names both vehicle rental and the other services you supply.

One commission figure is on public record. In the Supreme Court's Uber judgment, Uber kept a "service fee" of 20% of fares from the two lead claimants (paragraph 11). That was Uber's London model at the time of the tribunal, not a guide to what a local firm should charge.

How does each model feel to a driver in busy and quiet weeks?

On rent, a driver keeps all the upside in a busy week and takes all the loss in a quiet one. On commission, you share both.

Example, with made-up inputs. One driver over four weeks, comparing 18% commission with a £140 weekly rent. Takings are what passengers paid for the driver's jobs that week, before the driver's own fuel and running costs.

Over the month the driver is £52 better off on rent. But in week 3, the quiet one, rent costs them £59 more than commission would have. That's the week they remember.

What is the break-even between rent and commission?

The break-even is the weekly takings at which both models cost the driver the same: weekly rent ÷ commission rate. Below it, commission is cheaper for the driver. Above it, rent is.

In the example, £140 ÷ 18% = £777.78. A driver who usually takes more than about £778 a week is better off on rent, and one who takes less is better off on commission.

Work it out for your own drivers from your booking records. Take each driver's takings for the last 12 weeks, count the weeks above and below the break-even, and you'll know who wins and loses under each model before you say a word. A new firm with no records yet can't do that sum, which is one reason commission is easier to sell when you're starting out: nobody pays for work you haven't got yet. Finding those first drivers is covered in finding drivers for a new taxi company.

Which model is better for the owner's cash flow?

Rent gives you predictable cash flow. Commission ties your income to the work you actually send. Each has a cost in time and chasing.

Two decisions catch new owners out, whichever model they pick. First, who pays the card fees on card fares: you, the driver, or the passenger. Second, what happens in a week when a driver is on holiday or off sick. Decide both, write them into the driver's terms, and put them on the weekly statement.

Settle on the same day every week, with a statement that shows each job, the fare, how it was paid, and what was deducted. Late or muddled settlements lose you drivers whatever the rate, as our guide to taxi driver retention explains. What either model leaves you after costs is worked through in taxi business profit margins and how much taxi company owners earn.

Does rent or commission change a driver's employment status?

Neither model decides employment status on its own, but the courts have treated the difference as relevant. In Uber BV v Aslam [2021] UKSC 5, the Supreme Court said "a particularly important consideration is who determines the price charged to the passenger" (paragraph 92). It noted that Uber set the fares and fixed its own service fee (paragraph 94).

The same judgment looked back at a rent case. In Mingeley v Pennock (Amber Cars), a driver paid a weekly fee for access to the firm's radio and later its computer system, and kept the full fare. The Court of Appeal held in 2004 that he wasn't "employed" by the firm for the purposes of race discrimination law. The Supreme Court didn't say whether that case was right. It said that if the result was justified, it would be because the firm "did not receive any money in respect of any individual trip", which was "materially different from Uber's business model" (paragraph 113).

So a rent model where the driver keeps every fare sits differently in law from a cut of each job. It isn't a safe harbour. In Mingeley the driver also had to wear a uniform and charge the operator's fixed scale of fares, and the Supreme Court didn't endorse the result.

The minimum wage is where it gets expensive. If a tribunal found your drivers were workers, the government's minimum wage guidance says a deduction by the employer, or a payment from the worker to the employer, counts against minimum wage pay where the employer is "free to use that money in any way they wish". Rent and commission both fit that description. The full picture is in self-employed or employed taxi drivers, and for your own contracts, see an employment solicitor.

How does VAT apply to driver rent and commission?

Once you're VAT registered, what you charge drivers is a standard-rated supply. HMRC's Notice 700/25 says that an operator acting as agent for cash work must still account for VAT at the standard rate on the full charge to drivers "for the rental of vehicles, radios or other services" (paragraph 3.7), even when it's deducted from account fares before paying the driver. You must register once taxable turnover passes £90,000 in 12 months.

Whether you're an agent or a principal matters more than rent versus commission. The Notice says it depends on the terms of your written or oral contract with drivers and on how the business actually works (paragraph 3.4). If all your drivers are employees, you're a principal (paragraph 3.3), and a principal counts the full amount the customer pays as its supply, before paying drivers (paragraph 3.2).

London is different. Regulation 9(14) of TfL's operator regulations requires a London operator to contract with the passenger as principal. Outside London, the Supreme Court held in DELTA Merseyside v Uber Britannia [2025] UKSC 31 that the 1976 Act doesn't require an operator to contract as principal. Our guide to tax for a taxi business covers the rest, and an accountant should check your own position.

How do you switch drivers from rent to commission, or back?

Do the sums for every driver first, then talk to them before anything changes. A switch that surprises drivers costs you drivers.

1. Pull 12 weeks of takings per driver from your booking records.
2. Work out each driver's break-even and what they'd have paid under the new model.
3. Talk to drivers one by one. Show them their own numbers, winners and losers alike.
4. Give the notice your written terms set out. If they say nothing, give enough time for drivers to plan their money.
5. Offer a choice or a trial where you can, for example eight weeks on the new model with a review at the end.
6. Write the new terms down. The rate, what it applies to (cash, card, account, airport work), when you settle, who pays card fees and what happens in holiday weeks.
7. Switch on a settlement day, never in the middle of a week.
8. Review after three months against the same 12-week sums.

Dispatch AI is booking and dispatch software for taxi and private hire firms. Whichever system you use, check you can pull each driver's jobs and fares for any week before you change how you charge, because every step above depends on those records.