Motorists across Britain are being warned they could face fines of up to £2,500 and have their insurance invalidated for accepting money from friends or family members for lifts, even for routine journeys to work or nights out.
The warning comes from car insurance experts at Tiger.co.uk, who highlight that many drivers are unknowingly breaking the law by profiting from providing lifts, potentially operating as unlicensed taxis under current legislation.
Under the Public Passenger Vehicle Act 1981, drivers who make a profit from carrying passengers could be prosecuted for operating without proper licensing, facing steep penalties and the risk of having their vehicle seized by police.
Ian Wilson, Managing Director at Tiger.co.uk, explained the dangers facing unsuspecting motorists. “Sharing a car is a great way to split the cost of your journey and reduce your carbon footprint,” he said. “Most drivers are more than happy to offer a friend or a co-worker a lift, and there is nothing wrong with accepting a few pounds from passengers to help cover running costs, particularly given the fluctuating prices of fuel.”
However, Wilson warned that problems arise when drivers make a profit from these arrangements. “Issues can arise if you are making a profit from doing this, as it can be legally classed as a ‘hire or reward’ transaction,” he explained. “This would require taxi insurance rather than standard car insurance, which typically only provides cover for social, domestic and pleasure use.”
The legislation states that passenger contributions must be arranged before the journey begins and should only cover the vehicle’s running costs, including fuel and wear and tear. Any payment exceeding these actual costs could constitute illegal taxi operations.
“As this is a relatively unknown law, many unwitting motorists could be caught out and risk having their insurance invalidated and slapped with a hefty fine,” Wilson added.
Police forces across the UK have been cracking down on illegal ‘cash for lifts’ schemes, particularly those organised through social media platforms. The practice, known as ‘doing lifts’, has become increasingly common as people seek alternatives to expensive licensed taxi services.
Dorset Police recently exposed a closed Facebook group in Bournemouth and Poole with over 7,000 members that was being used to buy and sell car journeys, effectively operating as an illegal taxi service. The force warned that participants could face prosecution and significant penalties.
A spokesman for Dorset Police stated: “Before offering a lift in exchange for money, you should speak to your insurance company as this could invalidate your insurance and may result in your vehicle being seized by police, a fixed penalty or prosecution resulting in a fine, points on your licence.”
The Criminal Justice and Public Order Act 1994 specifically addresses ‘taxi touting’, making it illegal to offer lifts for money in an unlicensed vehicle. Those found guilty face not only the £2,500 fine but also six penalty points on their driving licence and potential vehicle seizure.
Tim Schwarz, a spokesperson for motoring experts at Moneybarn, warned about the severe consequences. “Cab services are very heavily regulated in the UK, especially since the rise of Uber in the modern age, so accepting money when unlicensed is not okay in the eyes of the law,” he said. “Without the right documentation, be prepared for a £2,500 fine, six licence points and even seizure of your vehicle.”
The issue has become particularly pronounced in Jersey, where authorities estimate the illegal taxi trade is worth approximately £1 million annually. One anonymous Jersey resident admitted to using social media platform ‘Jersey Lifts’ to earn as much as £300 in a single night providing unlicensed transport.
“It’s very easy to make at least £100 or more doing lifts on a Friday or Saturday,” the individual revealed. “With social media now it’s very easy to tell people that you’re going to be doing lifts on a given night, that way they can just message you directly to arrange the pick-up.”
The Jersey Taxi Drivers Association has reported that illegal operators are becoming increasingly “brazen”, with some advertising themselves as the “cheapest in Jersey” at £9 per journey. Association representatives stress that some perpetrators are “earning a living from this” illegal activity.
Insurance experts emphasise that standard car insurance policies typically prohibit “passengers carried in the course of a business for hire or reward”. GoCompare’s review of 362 private, fully comprehensive car insurance policies found that one in ten provide no cover whatsoever for lift sharing.
Where private car insurance does permit lift-sharing, it is strictly limited to social journeys, with drivers prohibited from making any profit. Lee Griffin, chief executive of GoCompare, noted: “The rising cost of motoring coupled with the current financial squeeze for many people has made lift sharing an attractive proposition.”
Rachel Wait from MoneySuperMarket advised drivers to exercise caution. “Drivers should always read the terms and conditions of their car insurance policy carefully to make sure they don’t accidentally invalidate it,” she said. “What may be seen as fairly innocent, such as charging somebody for a lift, may actually encroach on the terms of their insurance.”
She added: “Taking the odd pound here or there to help cover petrol costs or general car maintenance is usually fine, but if you’re found to be making a profit from giving someone a lift your policy could be invalid. Always check with your insurer if you’re not sure.”
The distinction between covering costs and making profit is crucial. While accepting petrol money or reimbursement for actual travel costs remains legal, any payment that results in financial gain crosses into illegal territory.
Derek Henry, Managing Director at specialist taxi insurance broker ChoiceQuote, warned against the practice, particularly during busy periods like Christmas when demand for transport increases. “Whilst it may seem like a simple act of generosity to offer lifts to your friends and family, drivers must be aware of the legal implications,” he said.
To avoid falling foul of the law, Henry advises drivers to refrain from taking any form of payment from loved ones when offering lifts. “Drivers are therefore advised that if they choose to offer a lift to loved ones, another form of repayment for doing so would be to take it in turns being designated driver,” he suggested.
The government has issued guidance stating that to make a profit from giving lifts, road users must have a valid taxi or private hire licence. The Statutory Taxi and Private Hire Vehicle Standards emphasise the importance of proper licensing to protect passenger safety.
Despite the risks, a recent study by insurance provider Admiral revealed that 73 per cent of people don’t offer money towards petrol after accepting a journey, with 72 per cent claiming that even close friends don’t offer to pay towards journey costs.
As authorities continue to crack down on illegal taxi operations, drivers are urged to familiarise themselves with the law to avoid potentially costly mistakes that could result in criminal prosecution and invalidated insurance coverage.
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