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Financial Standing

27 November 2018
The law requires that all applicants or holders of a HGV Operator’s Licence have sufficient financial standing to ensure that they can properly finance their operation and maintain their vehicles in a fit and roadworthy condition. 

As of 1 January 2018, the level of financial standing that operators are required to show was revised upwards. In light of the changes to the financial standing levels, new applicants and existing licence holders should ensure they continue to meet these requirements.

 Licence Type   Financial Standing per Vehicle (£)
Standard Licence Holders (National & International) First vehicle  7,950
  Each additional vehicle 4,400
 Restricted Licence Holders First vehicle 3,100
  Each additional vehicle 1,700



Worked Example

An operator with a Standard Operators Licence for 5 vehicles would be required to show financial standing of:-

1 x £7,950 + 4 x £4,400

= £25,550

Operators must be able to demonstrate that they consistently maintain financial standing to the requisite level. The amount of financial standing required is calculated by the maximum number of vehicles an operator is authorised to operate, not just the number of vehicles it actually operates.

For new applicants, the licence application form will not pass the first stage unless financial standing can be evidenced. Therefore, financial standing is essential for a haulage business from day one. From then on, a Traffic Commissioner may, at any time during the life of the licence, require an operator to evidence their financial standing. 

If a Traffic Commissioner suspects that an operator has fallen below their required financial standing levels they can order a public inquiry, which could result in the operator’s licence being revoked, suspended or curtailed. Even if a public inquiry is called for a reason other than financial standing (for example drivers’ hours' offences or repeated fixed penalties) the Traffic Commissioner will demand to see evidence of financial standing, including 3 months' worth of bank statements.

Evidencing Financial Standing

There are a number of ways an operator can evidence financial standing. The most common ways are summarised below:

Bank statements

An average balance taken from the last three months' bank statements can demonstrate financial standing (or an average over a one month period for new applicants). The Traffic Commissioner will reject snapshots showing balances at one moment in time.

It has been known for operators to transfer funds into a bank account to improve the look of their finances before providing those statements to the Traffic Commissioner. Beware:  Traffic Commissioners may well enquire as to where the funds have come from, and they will not look fondly upon an operator that has tried to circumvent the system by temporarily transferring money from elsewhere in order to demonstrate financial standing. 

Overdraft facility

Funding available via an overdraft facility will count towards an operator’s financial standing. The overdraft will be taken into account when assessing an average bank balance over a period of 3 months. For example, if an operator’s average balance over 3 months is £20,000 into its overdraft facility and it has an overdraft facility of £50,000, this would leave £30,000 to evidence financial standing.

Other funds

The Traffic Commissioners appreciate that not all operators have a large sum of cash in the bank to demonstrate financial standing. Therefore, there are other ways that an operator can meet its financial standing obligations. 

Credit Cards

An available balance on company credit cards can be used to demonstrate financial standing. Partnerships and individuals can also use their own personal credit cards to evidence financial standing. However, if called to a public inquiry, an operator should consider the negative impression a Traffic Commissioner would be left with if they see an operator scraping together funds from a number of different credit cards. Pre-planning and monitoring of financial standing can avoid that embarrassment at a public inquiry.

Invoice factoring agreements

Funds available to an operator via an invoice factoring facility can be used as evidence of financial standing. However, a common misunderstanding amongst operators is that the maximum limit of this facility is evidence of the financial standing. This is incorrect. If, for example, the factoring agreement allows for a maximum facility of £750,000, this does not mean that the operator has this amount available to it. An operator will have to show evidence that there are funds held under the factoring facility that the operator has quick access to.


In the case of limited companies, the Traffic Commissioner may accept a form of cross-company guarantee from associated entities. For sole traders and partnerships there is a possibility that financial documents could be in the name of another party but these must be endorsed by a statutory declaration. It is very much at the Traffic Commissioner’s discretion whether to accept this type of evidence.

Less common, but still acceptable forms of financial standing include evidence of:

  1. Debts which are obtainable because they are due and likely to be easily collected; and
  2. Assets that can be sold to raise funds quickly if required (without the sale of those assets having an adverse effect of the running of the transport operation). 

Period of grace

Where a licence holder cannot demonstrate financial standing the Traffic Commissioners, at their discretion, can provide the operator with a maximum period of up to 6 months to rectify the situation and demonstrate that they can permanently meet their financial standing requirements.

Financial standing – things to remember:

  • Calculate the required financial standing amount by multiplying current levels by the number of vehicles you are authorised to operate. Remember that the financial standing figures are reviewed every year.
  • Keep a check on your financial standing. Diarise to do a regular “stock take” of your finances to ensure that you are maintaining required levels.
  • Consider increasing credit facilities if required; often agreeing an increased overdraft facility with your bank is the simplest way of increasing your financial standing. If your financial standing is looking tight, then making arrangements with your bank to increase your overdraft can help. 
  • Be transparent. If the Traffic Commissioner requests information or orders a public inquiry, provide all relevant documentation as quickly and as accurately as possible. If the operator does not meet its financial standing level then co-operation by the operator will make it much more likely the Traffic Commissioner will allow a period of grace to rectify the situation.


Further Reading