Changes to Vehicle Excise Duty (VED) from April 1, 2025, have left millions of UK motorists uncertain and under-informed, according to new research from Carwow, the online car-changing marketplace.
Despite the sweeping reforms — which apply to all UK drivers, including owners of petrol, diesel, hybrid, and electric vehicles — nearly six in 10 (62%) of respondents admitted they did not fully understand the changes, while almost two thirds (64%) are unsure whether their own car tax has actually increased.
The updated VED system introduced a flat £195 annual rate for most vehicles and removed 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 affects approximately 70% of new EVs.
Yet, more than half (53%) of UK motorists say they still don’t know how much the changes cost them in cash terms, underscoring a concerning lack of clarity around one of the most fundamental costs of car ownership, Carwow said.
Carwow’s research also found that more than half (52%) of UK motorists believe the government should be doing more to support consumers’ transition towards EVs – such as providing incentives and tax reliefs where possible.
Despite this, the majority of respondents (58%) still believe the changes to VED, which now involve applying tax to EV owners, would not put them off going electric in 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 simple on paper, the removal of exemptions, the new cost layers, and inflation-linked increases have clearly made things harder to track. People are unsure what they owe — especially when taxing a car for the first time under the new rules.
“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. “
To support a smoother transition and better outcomes for motorists, Carwow is calling on the government to implement its ‘Future of Motoring Manifesto’, a 10-point plan aimed at improving 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
