ON THE RISE: TfL set to hike taxi and private hire licence fees as £7m deficit looms
- Perry Richardson
- 2 minutes ago
- 2 min read
Transport for London (TfL) has proposed increases to taxi and private hire driver and vehicle licence fees in a bid to reduce a forecast £7 million annual deficit in its licensing and enforcement budget.
Under the plans, taxi driver licence fees would rise from £300 to £343 for a three-year licence, while private hire driver licence fees would increase from £310 to £343. Taxi vehicle licence fees would rise from £110 to £120 for a one-year licence, while private hire vehicle licence fees would remain frozen at £140.
The proposals set out in a Finance Committee paper, recommends partial cost recovery rather than a full uplift to close the funding gap.
TfL’s consolidated licensing accounts show an in-year deficit of £7.5 million forecast for 2025/26, with operating costs of £44.8 million against revenue of £37.3 million. Without changes, deficits of between £7 million and £11 million per annum are projected over the next five financial years, amounting to a cumulative shortfall of £42.1 million from 2026/27 to 2030/31.
Driver and vehicle fees set to rise from June as regulator seeks partial cost recovery amid mounting licensing shortfall
The regulator states that licence fee income must be used solely to administer licensing and enforcement functions and cannot generate a surplus or be cross-subsidised between streams. It adds that fees were frozen for several years following the pandemic to support trade recovery, with the last full update undertaken in 2017.
Since then, inflation has risen by more than 35 percent and TfL has expanded compliance and enforcement activity, including recruiting 250 additional Security, Policing and Enforcement officers and increasing on-street operations. The introduction of national statutory standards, mandatory HMRC tax checks and investment in a new digital licensing system have also added to cost pressures.
Under the proposed changes, the taxi driver application fee would increase from £120 to £138 and the grant of licence fee from £180 to £205. For private hire drivers, the application fee would rise from £124 to £138 and the grant of licence fee from £186 to £205. Taxi vehicle application fees would increase from £66 to £70 and grant of licence fees from £44 to £50, while private hire vehicle fees would remain unchanged.
The paper also outlines separate increases to driver assessment fees, including rises to SERU resit charges and Knowledge of London examination fees, although these are subject to a separate decision process.
TfL forecasts that, if implemented from 1 June 2026, the changes would reduce the deficit by £2.0 million to £5.1 million in 2026/27 and by £2.3 million to £4.9 million in 2027/28. The remaining shortfall would be addressed through further reviews and cost control measures.
If approved, the revised fees would apply at the next renewal cycle for individual licensees, typically every three years for drivers and annually for vehicles.
