Hackney carriage vs private hire: which should you start?

If you're starting a taxi business in England or Wales, one decision shapes nearly everything that follows: will your cars be hackney carriages, private hire vehicles, or both? Hackney carriage vs private hire comes down to how passengers can hire the car, who sets the price and how many plates the council will issue.

This guide sets out the legal difference, the fare rules, where councils cap numbers, what three named areas charge, and which model fits which kind of work.

What is the difference between a hackney carriage and a private hire vehicle?

A hackney carriage can ply for hire, which means it can wait at a rank or be flagged down in the street. A private hire vehicle can't: every journey has to be booked in advance through a licensed private hire operator.

The two come from different laws. Hackney carriages are licensed under the Town Police Clauses Act 1847. Section 38 of that Act treats any carriage standing or plying for hire in the street as a hackney carriage, and section 45 makes it an offence to ply for hire without a licence. Private hire vehicles are licensed under Part 2 of the Local Government (Miscellaneous Provisions) Act 1976, which defines one as a vehicle built or adapted to seat fewer than nine passengers, provided for hire with a driver, that isn't a hackney carriage.

The licences differ too. GOV.UK says taxis only need a taxi vehicle licence and a taxi driver licence, while private hire needs a vehicle licence, a driver licence and an operator licence, all from the same council.

Can a private hire car use a taxi rank or pick up a street hail?

No. A private hire driver who picks up someone who hasn't booked is plying for hire without a hackney licence. The DfT's Statutory Standards warn passengers that an unbooked private hire car won't be insured and may not be licensed.

Councils enforce this. Birmingham City Council tells its private hire drivers they must not ply for hire or stand on hackney carriage ranks, and that it will prosecute those who do.

A hackney carriage can do both kinds of work. It can take rank jobs and street hails in its own district, and it can carry pre-booked fares as well. The DfT's best practice guidance notes that taxi licence holders can carry pre-booked fares anywhere in England and Wales. For that reason some councils now ask new taxi drivers to declare that they'll work mainly in the council's own area.

Who sets the fares for taxis and private hire?

The council sets taxi fares, and it has no power over private hire fares. Section 65 of the 1976 Act lets a district council fix a table of fares for hackney carriages, for time and distance, after publishing a notice in a local newspaper and allowing at least 14 days for objections.

The DfT's best practice guidance says most licensing authorities use this power, and confirms there's no power to set fares for private hire vehicles. The table is a maximum. A driver can charge less, and the guidance accepts that booking firms can advertise a discount off the metered fare, though it discourages haggling at ranks.

One rule catches firms that run both kinds of car. Section 67 of the 1976 Act says a hackney carriage used for a pre-booked job inside its own district can't charge more than the table, calculated from the point where the passenger's journey starts. So a hackney on your circuit doing a local pre-book still works to the meter rate, even if your private hire price for the same trip is higher.

Private hire operators set their own prices: fixed fares by zone, a mileage rate or a quote per job. Our guides to pricing taxi fares and zone pricing for taxi firms show how to build a price list.

Can the council limit the number of hackney carriage licences?

Yes, on one ground only. Section 16 of the Transport Act 1985 lets a council refuse a hackney carriage licence to limit numbers if, and only if, it's satisfied there's no significant unmet demand for taxis in its area.

The DfT doesn't favour these quantity restrictions. Its best practice guidance quotes the Competition and Markets Authority's view that caps aren't needed for safety or fair fares and can harm passengers through longer waits. The guidance says most licensing authorities don't cap numbers and calls that best practice. Councils that keep a cap should review it at least every five years, normally with an unmet demand survey, and the guidance notes that capped plates can change hands for tens of thousands of pounds.

Three councils that do cap numbers:

• Bristol City Council limits hackney carriage vehicle licences to 795 and tells applicants to check a licence is free before buying a car. New Bristol hackneys must be wheelchair accessible, ultra low emission and painted Bristol Blue.
• Havant Borough Council limits hackney carriage licences to 40, five of which must be wheelchair accessible. A report to its licensing committee on 15 June 2026 recommended keeping the limit after a survey carried out in 2025.
• City of York Council licensed 190 hackney carriages, 55 of them wheelchair accessible by licence condition, according to a March 2025 report. A 2022 survey there found significant unmet demand, and the council issued seven new wheelchair-accessible licences.

The 1985 power covers hackney carriages only. Private hire is also where the growth has been: the DfT counted 52,300 licensed taxis in England on 1 April 2026, down 7% on 2024, against 290,000 private hire vehicles, up 13%.

How much does each model cost to license?

Fees are set by each council, so treat these as examples and check your own council's fee list before you budget.

A hackney-only firm has no operator fee to pay, because taxis need only vehicle and driver licences. The bigger difference is the car. Birmingham only licenses purpose-built hackney carriages, or van-based vehicles with whole vehicle type approval, while a new private hire car there must be under 8 years old when you apply. In a capped area you may also have to buy a plate from an existing owner.

Our guide to taxi licence fees compares more councils, and the private hire operator licence guide walks through the operator application.

Which model suits which kind of work?

Pick the model that matches where your passengers come from.

1. Mostly pre-booked work. Airport runs, account work, school contracts and event transport are all booked ahead, so private hire fits. You need an operator licence, and every car and driver licensed by the same council.
2. Ranks, stations and late-night street work. Only a hackney carriage can take these jobs. Check the council has plates available and budget for a purpose-built or wheelchair-accessible vehicle where the council requires one.
3. A mix of both. Many drivers hold both licences. On 1 April 2026, 20% of the 417,300 driver licences in England were dual taxi and PHV licences, according to the DfT.
4. Wheelchair users. Hackney fleets carry most of the accessible cars, at 54% of taxis against 2% of PHVs in England.

Whichever you choose, pre-booked private hire jobs come with paperwork. Section 56 of the 1976 Act requires an operator to record the particulars of every booking before the journey, in the form the council sets. Our guide to private hire record keeping lists the fields. Dispatch AI is booking and dispatch software for taxi and private hire firms. It answers your phone, WhatsApp, texts and emails, books the jobs at your prices and sends them to your drivers on your own app.

How is London different?

In London, Transport for London licenses both trades. Black cabs come under the Metropolitan Public Carriage Act 1869 and private hire under the Private Hire Vehicles (London) Act 1998.

To drive a London taxi you need the Knowledge of London. TfL says its Blue Book lists 320 routes within six miles of Charing Cross, and that students typically take three to four years to master it. Private hire drivers sit a topographical skills assessment instead. Our guide to starting a private hire firm in London covers the London operator licence in full.