HOW MUCH DOES A LONDON TAXI DRIVER EARN? Hours, tariffs and running costs shape cabbies' pay
- Perry Richardson
- Aug 11
- 3 min read
How much a London taxi driver earns varies widely. Income depends on hours worked, the tariffs chosen, and the driver’s cost base.
Many drivers now judge their earnings by an hourly target. A recent driver discussion covered by us put black cab daytime targets at around £40 per hour, with higher returns when working busy periods and higher tariffs. There’s also a TfL paper that lists 2025 rates per hour which can be used as part of our modelling: Tariff 1 £41.62, Tariff 2 £50.35, Tariff 3 £53.33. On a good day these rates are achievable, but it’s worth remembering, not all days are good.
TfL sets metered rates and the times they apply. Daytime runs on Tariff 1. Evenings and weekends move to Tariff 2. Late nights and public holidays use Tariff 3, which pays the most per mile and per hour. The current structure took effect on 26 April 2025 alongside a minimum fare rise to £4.20 and a 5.05% uplift on Tariffs 1 to 3.
When a driver works more hours, fixed costs are spread across more jobs. Finance or rental, insurance, licence fees and equipment are largely fixed by the week or month. The main cost that rises with extra hours is fuel or electricity. TfL’s latest fares paper shows operating costs have grown again, with another large jump in insurance and with home and rapid charging now included in the Cost Index.
Vehicle ownership changes the picture. A new entrant renting or financing a cab carries a larger weekly bill than an owner-driver who has paid off their vehicle. The typical rental for an LEVC TX stands at about £360 to £400 per week, with insurance included in that figure. That weekly figure must be covered before the driver pays themselves.
Maintenance costs vary by fleet age and warranty cover. Owners of older cabs out of warranty face higher and more unpredictable repair bills compared to those running newer vehicles still under cover. That risk feeds directly into the hours needed to break even.
Time of day can lift hourly returns. A driver focusing on evenings, nights and weekends will usually earn more per hour than someone working only weekday days, because Tariffs 2 and 3 pay higher rates. The tariff timetable and rate bands are set out by TfL.
Season plays a part too. June sits in London’s peak visitor season, supported by major events and tourism. That usually brings stronger demand for cabs. The London Convention Bureau lists June and July as peak months. Drivers often mark the Easter school holiday period as one of the quietest stretches of the year, with many also referring to an early-year “kipper season” lull.
How this translates into profit is straightforward to map. Think of two parts. First, fixed costs per week. Second, variable cost per hour, mainly fuel or electricity. Net margin per hour is the metered income per hour minus the variable cost. Break-even hours are fixed costs divided by that net margin per hour.
As an illustration using figures drivers discuss publicly, if a cabbie targets £40 an hour and spends £5 per hour on fuel, the margin is £35 per hour. With £400 in fixed weekly costs, the first 11 to 12 working hours cover the week’s nut. Every further hour at that target adds about £35 before tax. If the same driver works mostly on Tariff 3 and averages higher than £40 per hour, break-even arrives sooner. If they own their cab outright and fixed costs are lower, it arrives sooner again. These are examples to show the method rather than set earnings.
For new entrants, the rental or finance line will be the single biggest driver of the weekly break-even. For established owner-drivers, it is usually insurance and maintenance. For everyone, shifting more hours into higher-paying tariff windows and into peak months can lift the average hourly figure and reduce the hours required to turn a profit.
For new entrants, the rental or finance line will be the single biggest driver of the weekly break-even. For established owner-drivers, it is usually insurance and maintenance. For everyone, shifting more hours into higher-paying tariff windows and into peak months can lift the average hourly figure and reduce the hours required to turn a profit.
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