How to price taxi fares: a guide for taxi and private hire firms

Price your fares too low and every busy Friday loses you money. Price them too high and the phone goes quiet. This guide shows how to price taxi fares for a UK taxi or private hire firm from your own costs, how to check them against council tariffs, and how to set the minimum fare, waiting time and airport prices so the fare you quote is the fare that pays.

Who sets taxi fares in the UK?

Private hire firms set their own fares, and councils set the maximum fares for hackney carriages. The Department for Transport's best practice guidance for licensing authorities puts it plainly: "There is no power to set fares for private hire vehicles."

Hackney carriages are different. Under section 65 of the Local Government (Miscellaneous Provisions) Act 1976, a district council can fix hackney carriage fares in a table. It has to publish the table in a local newspaper and allow at least 14 days for objections. The DfT's guidance says these tariffs are a maximum: a driver can charge less, never more. In London, TfL sets taxi fares.

So if you run private hire, the price list is yours. If you run hackney carriages on pre-booked work too, the council's table caps what those cars can charge. Our guide to hackney carriage vs private hire explains the two licences.

What does a mile cost to run?

Your cost per mile is the car's running costs divided by the miles it covers. Fuel is the easiest part to pin down, because HMRC publishes a figure every quarter.

HMRC's advisory fuel rate for a petrol car of 1,401cc to 2,000cc is 17p a mile from 1 September 2026, worked out from 42.8 miles per gallon and petrol at 159.9p a litre. A fully electric car is 7p a mile on home charging and 15p on public chargers. HMRC sets these for company car mileage, not for taxis, but they're a fair starting point for the fuel line.

Everything else comes from your own books: insurance, the vehicle licence, servicing, tyres, the MOT or council test, finance or depreciation, and cleaning. Add up a year of those costs for a typical car and divide by the miles it did that year.

Example only, with made-up figures. A car's other costs come to £9,000 a year over 40,000 miles. That's £9,000 ÷ 40,000 = 22.5p a mile. Add 17p of fuel and the car costs 39.5p a mile to run.

How do you turn your costs into a fare?

Add the cost of the miles, the cost of the driver's time and your own share, then round to a price you can say on the phone. Count the miles and minutes to the pickup as well as the journey itself, because the driver pays for both.

The driver's time is the bigger part. A self-employed driver pays their own costs and gets no holiday pay, so their time has to be worth well above the £12.71 National Living Wage that applies to workers aged 21 and over from April 2026.

Example only, with made-up figures. A 5-mile, 15-minute journey, with 2 miles and 8 minutes to reach the pickup. The driver's time is valued at £20 an hour (33.3p a minute) and the firm takes 15% of the fare.

Run the same table for your ten most common journeys before you change anything.

If the result is far above what local firms charge, look at your costs first. If it's far below, you're leaving money on the table.

How do council hackney tariffs compare?

A council's hackney carriage tariff is a useful check on your private hire prices, because it's public and every passenger in town can compare against it. Here are two, from the councils' own pages:

The Sheffield figures are worked out from its table with no waiting time: 1,760 yards in a mile ÷ 176 = 10 steps of 20p, so £2.00 a mile. A 2-mile trip is £3.50 plus (3,520 − 100) ÷ 176 = 19.4 steps, so about £7.40. Beyond 10 miles, Sheffield charges 20p every 159 yards, about £2.21 a mile.

Tariffs differ a lot between councils, so check your own council's current table before you compare.

Should you price by zone or by the mile?

Use fixed zone prices for the journeys you do every day, and a mileage rate for everything else. Zones are quick to quote and easy for a passenger to trust. Mileage covers the long and unusual jobs a grid can't.

Our guide to taxi zone pricing shows how to build a zone map from three months of your own bookings. If you take bookings in software, load the prices there so they come from the list, not from memory. Dispatch AI, for example, uses fixed prices by zone, set by you, and its AI phone agent quotes your own fixed prices on the call.

What minimum fare should you charge?

Set a minimum fare that covers the trip to the pickup and the driver's time on a short job. Without one, a half-mile hop can cost you more than it pays.

Example only, with made-up figures. Using the costs above, a 1-mile, 5-minute job with the same 2 miles and 8 minutes to the pickup works out at (3 × 39.5p) + (13 × 33.3p) = £1.19 + £4.33 = £5.52, or £6.49 once the firm's 15% is added. So a minimum fare of about £6.50 stops short jobs running at a loss.

For comparison, TfL's black cab minimum fare is £4.40 at all times, and Sheffield's day tariff starts at £3.50, rising to £4.70 on Friday, Saturday and Sunday nights.

How do you charge for waiting time and extras?

Charge waiting time by the minute after a set free period, and tell the passenger the rule when they book. Sheffield's hackney tariff charges 20p for every 45 seconds of waiting, which is £16 an hour (3,600 seconds ÷ 45 = 80 steps of 20p).

Decide your extras the same way and write them down: larger vehicles, extra stops, bank holidays and soiling. Sheffield's own list adds £2 for 5 to 8 passengers, £1.20 on bank holidays and a soiling charge of up to £80.

Card fees belong in the fare, not on top of it. One payment provider, Stripe, publishes a standard rate of 1.5% + 20p for standard UK cards, so a £20 card fare costs you 30p + 20p = 50p. TfL tells black cab passengers there's no extra charge for paying by card.

How do you price airport fixed fares?

Set one fixed price from each zone to each airport, and make it include every charge the passenger can't avoid. Airport runs are where passengers compare quotes most, and where a surprise charge loses you the next booking.

Build in the airport's own charges. Heathrow charges £7 every time a vehicle enters a terminal drop-off zone, and says all taxis and private hire vehicles must pay it. Gatwick's drop-off zones charge £10 for 10 minutes, then £1 a minute up to 20 minutes. Ask each airport you serve how its charge applies to taxis and private hire cars.

Since 6 April 2025 the law on headline prices has been stricter. The Competition and Markets Authority's guidance says showing a headline price and then adding mandatory charges as the customer goes on, known as drip pricing, is prohibited. So unavoidable drop-off charges go into your airport fixed fares, not after them.

Remember the return leg.

A 40-mile airport run usually means 40 empty miles home unless you've got a pickup waiting, and the price has to carry that. Our guide to winning more airport work covers filling those return trips.

How often should you review your fares?

Review your prices whenever a big cost moves, not only once a year. The DfT tells councils that taxi tariffs should be reviewed after significant changes in licensing fees and other major costs such as fuel, and the same reasoning applies to your own list.

HMRC reviews its advisory fuel rates every quarter, on 1 March, 1 June, 1 September and 1 December, which makes a handy reminder to rerun your cost per mile. When the sum says it's time to go up, tell your regulars and your account customers before the new prices start, and see our guide to turning passengers into regulars for keeping them.