How to Start a Transport Company in the UK (2025 Guide)

Starting a transport company in the UK requires careful planning, compliance with regulations, and understanding of the logistics industry. This comprehensive guide walks you through every step—from company registration to obtaining your Operator's Licence (O-licence), securing insurance, and setting up compliance systems. Whether you're starting with one vehicle or planning a larger fleet, this guide covers everything you need to know.

Step 1: Company Registration

Before you can operate a transport business, you need to register your company. In the UK, you have two main options:

Limited Company (Ltd)

Most transport companies choose to register as a limited company. This provides:

• Limited liability: Your personal assets are protected if the business faces financial difficulties
• Professional credibility: Customers and suppliers often prefer working with limited companies
• Tax benefits: Potentially more tax-efficient than operating as a sole trader
• Cost: £12-£50 to register online via Companies House

Sole Trader

Operating as a sole trader is simpler but offers less protection:

• Unlimited liability: Your personal assets are at risk
• Simpler setup: Just register with HMRC for self-assessment
• Lower initial costs: No registration fees
• Less suitable for larger operations: Difficult to scale and secure financing

Recommendation: For transport operations, a limited company is generally the better choice due to liability protection and professional credibility.

Step 2: Operator's Licence (O-licence)

An Operator's Licence (O-licence) is mandatory if you operate goods vehicles over 3.5 tonnes gross vehicle weight (GVW) for hire or reward. This is one of the most critical steps in starting a transport company.

Types of O-licences

O-licence Requirements

To obtain an O-licence, you must meet several requirements:

• Good repute: You and any transport managers must have a clean criminal record and no history of serious transport offences
• Financial standing: You must demonstrate sufficient financial resources (typically £8,100 for first vehicle, £4,500 for each additional vehicle)
• Operating centre: A suitable base for your vehicles (must be approved by the Traffic Commissioner)
• Transport Manager: For Standard licences, you need a qualified Transport Manager (CPC holder) who is either employed or contracted
• Maintenance arrangements: Evidence of proper vehicle maintenance systems and facilities

Processing time: O-licence applications typically take 7-9 weeks from submission to decision. You cannot start operations until your licence is granted.

Learn more about compliance requirements in our guide: How to Stay Compliant with UK & EU Transport Regulations in 2025.

Step 3: Insurance Requirements

Transport companies require multiple types of insurance to operate legally and protect against risks. Here's what you need:

Motor Fleet Insurance

This is mandatory for all vehicles and covers:

• Third-party liability (minimum legal requirement)
• Vehicle damage and theft
• Driver injury coverage
• Cost: Typically £2,000-£10,000+ annually per vehicle, depending on vehicle type, driver experience, and claims history

Goods in Transit Insurance

Protects the cargo you're transporting:

• Covers loss or damage to goods during transport
• Essential for protecting against customer claims
• Coverage limits vary based on cargo value
• Cost: Typically £500-£2,000+ annually depending on coverage limits

Public Liability Insurance

Covers third-party claims for injury or property damage:

• Protects against claims from members of the public
• Typically covers £1-£5 million in claims
• Cost: Typically £300-£1,000+ annually

CMR Insurance (International Operations)

If you operate internationally, you may need additional CMR insurance to comply with the Convention on the Contract for the International Carriage of Goods by Road. This covers liability for international transport operations.

Step 4: Driver Cards and Tachograph Requirements

All drivers operating vehicles over 3.5 tonnes must have a valid driver card for digital tachograph recording. This is mandatory for compliance with EU/UK driving hours regulations.

Driver Card Requirements

• Application: Drivers must apply for a driver card through DVLA
• Cost: £38 per card (valid for 5 years)
• Processing time: Typically 2-3 weeks
• Renewal: Cards must be renewed before expiry
• Replacement: Lost or damaged cards cost £19 to replace

Tachograph Systems

Your vehicles must be equipped with digital tachographs that record:

• Driving time
• Rest periods
• Break times
• Vehicle speed and distance
• Driver identification

Modern Transport Management Systems like Averion TMS can automatically integrate with tachograph data to ensure compliance and reduce administrative burden.

Step 5: Compliance Basics

Transport companies must comply with numerous regulations. Here are the essential compliance areas:

Hours of Service (HOS) Regulations

Drivers must comply with strict driving hours limits:

• Daily driving: Maximum 9 hours (can be extended to 10 hours twice per week)
• Weekly driving: Maximum 56 hours
• Two-week driving: Maximum 90 hours
• Daily rest: Minimum 11 hours (can be reduced to 9 hours up to 3 times between weekly rests)
• Weekly rest: Minimum 45 hours (can be reduced to 24 hours)

CMR Documentation (International)

For international transport, you must use CMR consignment notes. These documents:

• Provide legal proof of contract between carrier and consignor
• Detail cargo, origin, destination, and parties involved
• Are required for all international road transport
• Must be completed accurately to avoid legal issues

Digital CMR systems can reduce paperwork time by 2-3 hours daily. Learn more: How to Digitise Your Logistics Workflow.

ePOD (Electronic Proof of Delivery)

Modern transport operations use electronic proof of delivery systems:

• Digital signatures and photos at delivery
• Real-time delivery confirmation
• Reduced disputes and faster invoicing
• Improved customer satisfaction

Vehicle Maintenance and Safety

Regular maintenance is legally required:

• Annual MOT tests for vehicles over 3.5 tonnes
• Regular safety inspections (typically every 6-8 weeks)
• Maintenance records must be kept for 15 months
• Defect reporting and rectification systems

Step 6: Setting Up Operations

Once you have your licence and compliance in place, you need to set up your operational systems:

Transport Management System (TMS)

A modern TMS is essential for efficient operations. It helps you:

• Plan and optimize routes (reducing fuel costs by 8-12%)
• Generate CMR documents automatically (saving 2-3 hours daily)
• Track driver hours and compliance
• Manage invoicing and payments
• Monitor fleet performance and costs

Compare TMS options to find the right solution for your business. Start a free 2-week trial of Averion TMS to see how it can streamline your operations.

Accounting and Financial Management

Set up proper accounting systems:

• Business bank account (separate from personal accounts)
• Accounting software or professional accountant
• VAT registration if turnover exceeds £85,000
• Expense tracking and invoicing systems

Fleet Starter Checklist

Use this checklist to track your progress when starting your transport company:

Frequently Asked Questions