What is ‘hire and reward’ for UK schools, not-for-profits and charities running minibuses?

If your school, charity or community group operates a minibus, one of the most important legal questions to answer is ‘are you operating for hire or reward’?
The answer will affect several things:

• Whether you need a PSV Operator’s Licence or a Section 19 Permit to operate
• Your insurance and compliance obligations

Many schools, clubs and organisations don’t think they operate for hire and reward as they are a charity and may not charge specifically for their minibuses, but they are likely to be taking indirect payment via fees, subscriptions or contributions, which constitutes hire and reward.
We’re going to explain what ‘hire and reward’ means in practical terms — and include some simple questions to help you decide where you stand.

What does ‘Hire and Reward’ actually mean?

In UK transport law, ‘hire and reward’ means you are ‘carrying passengers in return for payment or any form of consideration (direct or indirect)’.
This doesn’t simply mean you are charging people for every journey; payment can include:

• Transport included as part of a package (e.g. school fees or trip fees)
• Membership subscriptions
• A contribution towards fuel
• A fee specifically for transport

If passengers are being carried because some form of payment has been made, it is likely that it is hire and reward.
The guide to Section 19 and 22 Permits states ‘Hire or reward takes place if the journey is organised in a way that goes beyond the bounds of mere social kindness’.

Do charities operate for hire and reward?

Yes, just because you have a charitable status doesn’t mean you are not operating for hire or reward, or that you are not operating commercially, to raise additional funds through your minibus. Having a charitable status does not guarantee you a Section 19 Permit.
Hire and reward is about payment for transport, not the status of your organisation.
The question you need to answer is are you making a profit? If so, you’ll need a PSV Operators Licence; if not you can apply for a Section 19 Permit.

The Legal Framework for minibuses (put simply)

If your school is a private company that operates commercially, and doesn’t have charitable status, you will require a full PSV Operator’s Licence to operate your minibuses (or a restricted Operator’s licence for only two 9-16 passenger seat minibuses).
Most schools and charities operate minibuses under a Section 19 Permit, which replaces the PSV Operator’s licence, because they have charitable status or are not-for-profit organisations transporting their own pupils, members or beneficiaries.
A Section 19 permit allows operation for hire and reward (you can charge fares and pay drivers) provided certain conditions are met, including strict not-for-profit criteria.

The consequences of getting it wrong

Operating minibuses for hire and reward without the right permit or licence is a serious offence and could result in
• DVSA enforcement action
• Invalid insurance
• Personal liability for trustees or governors
• Vehicle impoundment
• Fines and prosecution

For schools and charities, reputational damage can be even more serious than financial penalties.
If you are in doubt, then seek specialist advice from a transport solicitor, and we recommend you stop your minibus operations until you have the right legal framework established.

Are you operating for hire or reward – simple self-assessment questions

1. Do you charge specifically for transport?

• Do you charge pupils or members a separate transport fee?
• Do you ask for fuel contributions?
• Is there a per-trip or per-seat charge?

If any of the answers are yes, that is hire and reward.

If the charge you are making is only to covers costs (this can include paying a driver), and you are a charitable or not-for-profit organisation, it is still hire and reward, but it is permitted with a Section 19 Permit.

2. Is transport included as part of a wider fee?

• Is transport included in school or membership fees?
• Do prices for residential or day trips include the transport?
• Do your members/users pay a subscription that gives them access to transport, whether they choose to use it or not?

If any of the answers are yes, that is hire and reward.

Those paying school fees, or a trip fee or a subscription have the right to be carried (unlike the general public) regardless of whether they choose to exercise that right. Even if transport is not separately itemised, this may still count as hire and reward because transport is provided in return for payment.

3. Are you making any surplus from transport?

If you are operating for hire and reward and are simply recovering genuine running costs (which can include paying drivers) this is acceptable under Section 19. Any surplus must be reinvested back into your minibus operations, and detailed records need to be kept to evidence this.
If you are generating profit from your transport operations, you will need a PSV Operators Licence to continue; profit-making is not permitted under a Section 19 Permit.

Some common examples

School trips
A school charges parents £30 for a day trip including the use of the school minibus.
This is hire and reward and is permitted under Section 19 provided the charge only covers the costs and is not-for-profit.

Sports club charging for match transport
A community football club asks players for £5 to cover fuel to take the minibus to a fixture.
This is hire and reward, and provided no profit is made is permitted under Section 19 Permit

Charity Offering Paid Airport Runs
A charity begins offering airport transfers to local families to raise funds
This is hire and reward, but for profit. Commercial hire and reward needs a PSV Operator’s Licence.

Still not sure?

Most UK schools, charities and not-for-profits do operate for hire and reward when running minibuses — but lawfully under Section 19 permits. If you’re not convinced you’re operating for hire and reward, and so don’t need a Section 19 Permit, ask yourself this

Are all your journeys within the bounds of mere social kindness?

If you are in any doubt, you need to seek specialist advice and likely apply for your Section 19 Permits as soon as possible.

Rivervale Minibus is here to help you all we can, but we can not offer legal advice. We can however, help you through the process of becoming as safe and legally compliant as possible.