Can you start a taxi company without owning cars?

Buying cars is the biggest cost of a new taxi firm, and you may not need to. In England and Wales you can start a taxi company without cars of your own, by taking bookings for self-employed drivers who own or rent theirs. This guide explains how that works in law, what you're still responsible for, how drivers pay you and the trade-offs against owning a fleet. Council rules differ, so check yours alongside the examples here.

Can you start a taxi company without owning any cars?

Yes, if you run it as a private hire firm. Section 80 of the Local Government (Miscellaneous Provisions) Act 1976 defines "operate" as making provision, in the course of business, for the invitation or acceptance of bookings for a private hire vehicle. The operator licence is about taking bookings. Nothing in that definition asks you to own a vehicle.

GOV.UK says a private hire driver either holds an operator licence or drives for a business that has one. HMRC's VAT Notice 700/25 describes the drivers who make this model work: if you've bought or rent your own vehicle and work self-employed, you're normally in business on your own account.

Hackney carriage work is different. GOV.UK says taxis need only a vehicle licence and a driver licence, with no operator licence, so a hackney business is built around the licensed vehicles themselves. Some councils cap them: Bristol limits hackney carriage licences to 795.

Scotland has its own rule. The Civic Government (Scotland) Act 1982 (Licensing of Booking Offices) Order 2009 needs no booking office licence where bookings are taken for 3 vehicles or fewer, so a licence applies from 4 vehicles.

What does an operator-only taxi firm do?

An operator-only firm takes and records the bookings, passes them to drivers and handles the customer side, while the drivers supply the cars. HMRC's notice says an operator acting as its drivers' agent typically relays bookings to them for an agreed fee and collects fares from account customers on their behalf.

Here's how the work usually splits:

What are you responsible for if the drivers own the cars?

You answer for every car and driver you send, even though you own none of them. Section 46(1)(e) of the 1976 Act says a licensed operator must not operate a vehicle as a private hire vehicle unless the car has a current vehicle licence and the driver a current driver licence. Knowingly breaking that rule is an offence under section 46(2).

GOV.UK adds that the driver licence, vehicle licence and operator licence must all come from the same authority. Councils then add their own conditions:

That last row matters most. The car isn't yours, but under section 56 the booking is. If a driver lets the passenger down, the passenger's contract was with you. The full record-keeping list is in private hire operator record keeping.

How do drivers pay you if they own the cars?

Drivers who own their cars pay you commission on each job, a fixed weekly rent, or a mix of the two. HMRC's notice calls it an agreed fee for relaying bookings. Commission rises and falls with the work. Weekly rent stays the same whether the week is busy or dead, so the driver carries a quiet week. Our guide to driver commission or weekly rent works through both.

Watch the VAT threshold as you grow. Your charges to drivers count towards taxable turnover, and you must register once it passes £90,000 in 12 months. Example only: at £100 a week rent each, 17 drivers bring in 17 × £100 × 52 = £88,400 a year, and the 18th takes you to £93,600.

Once registered, Notice 700/25 says you account for VAT at the standard rate on the full charge to drivers for vehicles, radios or other services you supply. If the rent doesn't rise, that VAT comes out of what you keep. More on this in tax for a taxi business.

Owning cars or using drivers' own cars: what are the trade-offs?

Using drivers' own cars saves you capital and the cost of empty cars, but you give up control over the fleet and you can only recruit drivers who already have a licensed car.

Control cuts both ways. The more you dictate how drivers work, the more the arrangement can look like employment. In Uber BV v Aslam, decided on 19 February 2021, the Supreme Court upheld findings that Uber's drivers were workers. Read self-employed or employed taxi drivers before you write your driver terms. If you do decide to buy, choosing vehicles for a taxi fleet covers the models councils accept.

Can drivers rent a car instead of owning one?

Yes, and the law allows for it. Section 80 says that for a vehicle on a hiring agreement or hire-purchase agreement, the proprietor is the person in possession of it under that agreement. Section 48 has the proprietor apply for the vehicle licence, and a council won't grant one unless insurance meeting Part VI of the Road Traffic Act 1988 is in force.

So a driver on a long-term hire or hire purchase can be the car's proprietor for licensing. The car still has to be licensed by your council, not the one where the rental firm is based. Liverpool's condition 7 adds that you mustn't require a proprietor to do anything that would breach their vehicle licence conditions, so don't ask drivers to cut corners on the car to suit you.

What does it cost to start a taxi company without cars?

Without cars, your start-up costs are mostly the operator licence, checks, phones and marketing. Operator licence fees vary by council:

• Telford: £655 for five years, for 1 to 5 vehicles.
• Liverpool: £800 for a five-year licence.
• Bristol: £356 for one year or £1,058 for five years.

A basic DBS check costs £20 from 5 October 2026, and Bristol wants one for each applicant. If you hold passengers' details, you also pay the data protection fee to the ICO, £52 on tier 1. There's no vehicle licence, finance or motor insurance to find, because the drivers carry those. The full picture is in what it costs to start a taxi business and taxi licence fees by council.

How do you find drivers who already have licensed cars?

Look for drivers licensed by your own council who want more work or a better deal than they have now. The Department for Transport counted 290,000 licensed private hire vehicles in England on 1 April 2026, but only the ones licensed by your council can do your bookings.

Drivers judge a firm by the work it gives them, the rent or commission it charges and how fast account money reaches them. 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. Our guides to finding your first drivers and taxi driver recruitment cover where to look and what to offer.