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Do I need a business licence in the UK?

6-minute read

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Sam Bromley

Sam Bromley

31 August 2023

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Do you need a business licence to start a business in the UK? You might need a business licence to operate in some trades or industries, or operate a vehicle.

If you want to know how to get a business licence, or find out how much a business licence costs, read on for a simple guide.

Business licence – do I need one in the UK?

In general, you can set up a small business without a business licence. All you need to do is set up as self-employed, choosing a legal structure for your business and registering with HMRC.

But many specialised business activities need you to have a business licence. These include (but aren't limited to):

  • alcohol sales
  • construction
  • selling (or hiring out) animals
  • events
  • health and beauty

Some individual activities may also require one-off licences, for example, street parties or other public events.

There are other business types that may need a licence before they can trade, too. These include taxi companies, food outlets, hotels, and dog breeders.

How to check whether you need a business licence

The licences that you need will be specific to your business and we can’t run through them all here. It’s best to use gov.uk’s licence finder to help you work out whether you need a business licence.

This tool lets you enter your business activities and then lists the licences that you might need. For example, if a hairdresser located in England wants to:

  • provide hairdressing services
  • use CCTV
  • play background music
  • offer ear, nose or body piercing

The tool suggests that this hairdresser will need:

  • ​​licences to play music in a theatre
  • licences to play background music
  • a notification to process personal data
  • a public space surveillance (CCTV) licence
  • to register as a state-registered hairdresser (voluntary)
  • a tattoo, piercing and electrolysis licence
  • a hairdresser registration

What about alcohol licensing?

You need an alcohol licence from your local licensing authority if you want to sell or supply alcohol.

You may need both a premises licence (which authorises the premises itself to sell alcohol) and a personal licence (one person on the premises must be a designated premises supervisor, who holds a personal licence).

There’s detailed guidance about alcohol licensing at gov.uk too.

How does this work when charging a corkage fee?

Whether or not your business has an alcohol licence, you can charge a corkage fee to customers who bring in their own alcohol. Whilst traditionally referring to wine (hence ‘corking’), a corkage fee can be used to cover other alcohol under a BYOB (bring your own booze) rule.

Businesses without an alcoholic licence can charge customers a corkage fee to drink on the premises, as a licence isn’t needed to consume alcohol bought elsewhere. If you allow customers to bring in their own alcohol, a corkage fee helps cover the costs of serving and chilling the drinks, as well as time spent washing glassware.

Businesses with an alcohol licence may also let customers bring their own alcohol – charging a corkage fee to help recover the loss of earnings from not ordering from the bar.

It’s not necessary for a business to charge a corkage fee (or how much to charge), so you can choose what works best for your business.

Who grants UK business licences?

Licences for small businesses in the UK are generally granted by individual local authorities. The gov.uk licence finder will help you find the right authority for your business, based on your postcode. If you’re in any doubt, you should speak to your local authority directly.

There are, however, exceptions to this – we highlight some of these below.

Business licences for playing recorded music in public

You’ll need a licence if you want to play recorded music in public, for example, in a shop.

You’ll need to speak to PPL PRS, who are the licensing body for music in the UK. Read more about getting this type of licence at the PPL PRS website.

Business licences for childminding and nursery businesses

If you want to run a child care or childminding business, you’ll need to apply for a licence from a specific government body:

Business licences for financial activities

If you’re carrying out certain financial activities, such as lending money or recovering debts, you’ll need to be authorised by the Financial Conduct Authority (FCA).

If you’re hoping to run a financial services business, you should get guidance directly from the FCA.

Getting an operator's licence

Another licence you may need when running a business is an operator licence. This is a legal requirement if you’re operating certain types of commercial vehicles in the UK – such as trucks or taxis.

Private hire vehicle (PHV) operator licences for taxis

You should apply for a PHV operator licence from your local authority – or from Transport from London if you’re based in the capital. You’ll need to be over 18 years old (21 in some areas) and meet certain criteria:

  • have the legal right to work in the UK
  • hold a full driving licence (for a minimum of 12 months)
  • have a proof of address and National Insurance number

You’ll also be required to pass the government’s Disclosure and Barring Service.

If you’re planning to operate your private hire vehicle in London, you’ll also need a Transport for London (TfL) driver’s licence. The two types of driver’s licence you can get are:

  • a small operator’s licence which covers up to two vehicles for private hire bookings
  • a standard operator’s licence which covers as many vehicles as you need

No matter which authority you’re working in, or which type of licence you get, you’ll need to renew it every five years. It’s also important to get the relevant insurance for your private hire vehicle.

O licence (operator’s licence) for heavy goods vehicles

If you're operating a goods vehicle in the UK, you'll need to make sure you have an O licence. This is a legal requirement if you’re operating a goods vehicle in the UK. Goods are considered anything not permanently attached to the vehicle – such as stock for your business. You’ll need an O licence even for rental vehicles if you’re using them for commercial reasons.

Your O licence will specify the number of vehicles covered – but you must own or be hiring at least one vehicle to get your operator’s licence. The licence is held by the person who ‘uses’ the vehicle(s). This can be the driver (even if they don’t own the vehicle) or the driver’s agent – such as an employer.

Your O licence will specify the number of vehicles covered – but you must own or be hiring at least one vehicle to get your operator’s licence. The licence is held by the person who ‘uses’ the vehicle(s). This can be the driver (even if they don’t own the vehicle) or the driver’s agent – such as an employer.

Types of O licence

There are three types of O licence available when you use a commercial vehicle in your business:

  • a restricted licence allows you to carry your own goods, but not those of another business, and is valid in both the UK and the EU
  • a standard national licence lets you carry your own goods, or other people’s for reward or hire, within the UK
  • a standard international licence is needed if carry your own goods, or other people’s, between the UK and other countries

You can apply for and manage your O licence on the UK government website.

How much is a business licence?

The cost for a business licence will depend on the type of licence you're applying for. It may also be affected by other factors.

For example, premises licences for alcohol in England and Wales are subject to an application fee, but that fee is based on the rateable value of the business premises (gov.uk says that application fees range from £100 to £1,905 for premises licences, depending on the fee band of your venue).

Individual local authorities set the cost for licences they provide, so the cost can differ depending on where your business is based. Your local authority will publish a list of its licence costs on its website.

You can find your local council here.

If you're applying for an O licence for your commercial vehicle, you'll be charged not only for your application, but again when the licence is issued and for any major changes made to it.

What about health and safety rules?

Regardless of whether or not you need a business licence, you have to follow health and safety rules and procedures. Every business has health and safety responsibilities, but the specific requirements may vary depending on the nature of your work and where it takes place.

The Health and Safety Executive (HSE) also grants permissions and licences for specific business activities. If you’re carrying out one of these risky activities and you don’t have permission or a licence, you may be breaking the law.

You can find out more rules by reading our simple guide to health and safety for small businesses.

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Sam Bromley

Written by

Sam Bromley

Sam has more than 10 years of experience in writing for financial services. He specialises in illuminating complicated topics, from IR35 to ISAs, and identifying emerging trends that audiences want to know about. Sam spent five years at Simply Business, where he was Senior Copywriter.

We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer

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