Taxi finance: funding a vehicle for private hire or hackney work

Taxi finance is an agreement that lets you pay for a hackney carriage or private hire vehicle over time, with the vehicle usually acting as the lender’s security. It is a form of asset finance, and the agreement is for a vehicle used in a business, not a personal car.

Drivers who own their vehicle and operators running several both use it. The difference is mainly scale: an owner-driver is often financing one vehicle as a sole trader, while an operator may finance a fleet through a limited company.

The main ways are hire purchase, leasing or contract hire, and a secured business loan, and they differ mainly in who owns the vehicle and what you owe at the end. The table compares them in general terms.

Our guide to the difference between finance and operating leases explains the leasing side, and the article on business car and vehicle finance covers vehicles more broadly.

Licensing matters because a lender is financing a vehicle that can only earn money if it is properly licensed. GOV.UK says you apply for a driver licence to the local council if you want to work outside London, or to Transport for London (TfL) if you want to work in London.

• You need a vehicle licence if you operate your own taxi or private hire vehicle.
• If you drive a private hire vehicle, you or your operator also need an operator licence.
• The driver, vehicle and operator (if private hire) must all be licensed by the same authority.
• For a driver licence you usually need a full British or Northern Ireland driving licence held for at least 12 months, and the authority must be satisfied you are a fit and proper person.

Councils set their own vehicle requirements, so check yours before you choose a vehicle. A lender may ask for evidence of your licence or your plans for one, and a vehicle that does not meet local rules can be hard to use as intended. If you are unsure which authority applies to you, ask the council or TfL.

Tax treatment depends on the vehicle and on how you are set up, and Capzy does not give tax advice, so confirm it with an accountant before you choose. HMRC treats most cars differently from other equipment, and a private hire saloon is generally a car.

GOV.UK says cars do not qualify for the Annual Investment Allowance, full expensing or the 40% first-year allowance. They can instead qualify for main-rate allowances (14% a year from April 2026) or special-rate allowances (6%), depending on emissions and purchase date. HMRC’s Capital Allowances Manual also says traditional London black cab type hackney carriages are not treated as cars, which can change the allowances available.

If you buy on hire purchase, GOV.UK says you can claim capital allowances for the payments you will make once you start using the item, but not the interest. Our guide to capital allowances sets out how the rules fit together.

Grants for zero emission taxis have existed, but they run to fixed dates and amounts, so check GOV.UK for whether one is open now. For example, on 21 February 2024 the government said the Plug-in Taxi Grant had been extended until 5 April 2025 at £6,000 per vehicle, and that more than 9,000 zero emission taxis had been supported since 2017.

Treat any grant as a discount on a particular new vehicle, not as finance. Local authorities and manufacturers may run their own offers, and clean air zone schemes vary by area. A grant reduces what you need to fund; it does not replace the need to plan the repayments on the rest.

It depends on the borrower and the size of the credit. Under the Regulated Activities Order, credit above £25,000 provided wholly or predominantly for a business is generally outside consumer credit regulation. The FCA says business lending of £25,000 or less to sole traders and small partnerships can fall inside its consumer credit perimeter, while the same lending to a limited company does not.

In practice, an owner-driver trading as a sole trader and financing a smaller vehicle may have extra consumer protections that a limited company would not. If you are not sure which applies, ask the finance provider to tell you in writing.

Lenders look at your ability to afford the payments, your licence position and the vehicle, and each sets its own criteria. Your credit history is part of that, and a poorer history can narrow the choice or change the terms.

• Proof of identity and address, and your business details.
• Evidence of income, such as bank statements, accounts or a Self Assessment record.
• Your licence, or the licence the vehicle will operate under.
• The vehicle itself: age, price and whether it suits the licensing rules.
• A deposit, if the lender asks for one.

If your credit file has problems, read how business loans with bad credit are assessed, and how soft and hard credit checks differ before you apply anywhere. Self-employed drivers can also see our guide to loans for sole traders.

The main risk is committing to payments that your earnings cannot reliably cover. Taxi income can vary with demand, season and time off the road, while the payments are fixed.

• If the vehicle is the lender’s security and you fall behind, the lender can take action under the agreement, which can include recovering the vehicle.
• Fees, insurance, licence renewals and maintenance sit on top of the finance payments.
• Ending an agreement early or selling the vehicle can trigger charges, so read those terms first.
• A vehicle that loses its licence eligibility, for example under a local age rule, may be harder to use or sell.

Capzy is a credit broker, not a lender, and is paid by the lender. We introduce drivers and operators to lenders offering vehicle and asset finance and set out what comes back so you can compare it.

You can check your funding options with a soft search that does not affect your credit score. A full application to a lender may involve a hard search, and any offer is subject to status and lender criteria. The lender directory lists asset finance providers by product.