'Confusion' over DVLA car tax changes 'impacting every driver' with £195 rate

Alterations to Vehicle Excise Duty (VED) from April 1, 2025, have left millions of UK drivers feeling uncertain and ill-informed, according to fresh research from Carwow, the online car marketplace.

Despite the comprehensive reforms - affecting all UK motorists, including those with petrol, diesel, hybrid and electric vehicles - nearly six in ten (62%) participants confessed they didn't fully comprehend the changes, while almost two-thirds (64%) are unsure if their own car tax has actually risen.

The revised VED system introduced a flat £195 annual rate for most vehicles and abolished the longstanding exemption for electric vehicles (EVs). Many newly registered EVs are now also subject to the Expensive Car Supplement, which applies to vehicles priced over £40,000 - a threshold that impacts approximately 70% of new EVs.

However, more than half (53%) of UK drivers admit they still don't know how much the changes cost them in monetary terms, highlighting a worrying lack of clarity around one of the most fundamental costs of car ownership, Carwow stated.

study also discovered that more than half (52%) of UK drivers believe the government should be doing more to aid consumers' transition towards EVs - such as offering incentives and tax reliefs where possible.

Despite this, the majority of respondents (58%) still believe the changes to VED, which now involve taxing EV owners, would not deter them from going electric in the future.

New car tax rates for 2025 explained

Iain Reid, head of editorial at Carwow, said: "Road tax might not be the most exciting part of owning a car, but it's one of the most important - especially when changes impact every driver in the UK. Our research shows just how much confusion still exists post-April and highlights the urgent need for clearer communication from the government.

"From April 1, 2025, the VED system changed significantly. Fully electric vehicles are no longer exempt - with new EVs paying a first-year rate of just £10, followed by a flat standard rate of £195. EVs registered between April 2017 and March 2025 now also pay the full standard rate per year.

"On top of this, the Expensive Car Supplement now applies to EVs for the first time - so if your car costs over £40,000, you're paying an additional £425 per year for five years, meaning an annual road tax bill of £620 from your second year of ownership. Most hybrids have also lost their previous VED discount, and petrol and diesel VED rates have increased in line with inflation.

"While the flat £195 rate is straightforward, the removal of exemptions, introduction of new charges, and inflation-adjusted hikes complicate the picture. Many drivers are struggling to keep up, particularly when they're faced with taxing their vehicle for the first time under these new regulations.

"On a positive note, the public's support for EVs is holding firm. On Carwow, in April we saw EV enquiries up 75% year-on-year. This suggests the public's interest for greener options is still there, but more must be done to help drivers feel confident, informed, and ready to make the switch."

In order to facilitate a smoother transition and better outcomes for motorists, Carwow is urging the government to put into action its , a comprehensive 10-point plan designed to boost EV adoption and driving confidence.

The proposals include:

• Reduce VAT to 5% on all EV charging
• Improve personal safety at charging points
• Fund home-based charging points
• Invest in improving EV infrastructure
• Introduce grants for new and used EVs
• Help public building car parks add charging
• Make EV insurance costs more affordable
• Bring transparency to clean air zones
• Introduce national try an EV day
• Compulsory charging points at major retail sites