Before you start

Established UK residence
Your foreign licence, which is surrendered on exchange
A Birmingham address for the DVLA
For driving in the city: a vehicle checked against the Clean Air Zone standard

Step-by-step

1
Check your vehicle against the Clean Air Zone before anything else
The zone is everything inside the A4540 Middleway ring road, all day every day. Broadly, a petrol car meeting Euro 4 or a diesel meeting Euro 6 is compliant and pays nothing; older vehicles are charged daily. Use the government vehicle checker with the registration rather than guessing from the age of the car — the standards are about emissions class, not year.
OnlineWho: YouBefore you drive in, or before you ship a car
2
Check whether your country is a designated country
The DVLA maintains a specific list of countries whose licences can be exchanged without a test. If yours is on it, exchange is a form and a fee, and must be done within five years of becoming resident. If it is not, you take the full UK theory and practical tests regardless of how long you have driven.
OnlineWho: YouIn your first month
3
Act within the twelve-month window
You may generally drive on a valid foreign licence for twelve months after becoming resident. After that you need a GB licence. People drive for years past this point without realising, which becomes a serious insurance problem the moment there is an accident.
OnlineWho: You
4
Apply to the DVLA to exchange
The exchange application goes to the DVLA in Swansea and your foreign licence is retained. Processing takes weeks and you will be without the original throughout, so do not post it just before a trip home.
OnlineWho: YouAllow several weeks
5
If you must test, book the theory test in your first month
The UK practical test has long waiting lists and a low first-time pass rate, and lessons are the real expense rather than the test fee. Someone from a non-designated country who waits until month ten of the twelve-month window will not make it.
In personWho: You
6
Work out whether you need a car at all
Birmingham has New Street, Moor Street and Snow Hill within ten minutes' walk of each other, a tram running north-west through the Jewellery Quarter and out to Wolverhampton, and a dense bus network. Central and inner-south residents frequently run no car. If you do, the Clean Air Zone, city-centre parking and residents' permits are the ongoing costs to price.
OnlineWho: You

Documents you’ll need

Foreign driving licence
Passport and eVisa share code
Proof of your Birmingham address
The DVLA application form appropriate to your licence's country of issue
Vehicle registration, to check Clean Air Zone compliance

Things most newcomers don’t know

The Clean Air Zone boundary is the ring road, and Class D means cars are charged.

Several English clean air zones exempt private cars entirely. Birmingham's does not — it is Class D, so a non-compliant car pays every day it enters the area inside the A4540, including weekends and the middle of the night. If you are shipping an older diesel or buying second-hand cheaply, check the registration against the government checker first; the cost of getting this wrong is a four-figure annual bill.

Source: GOV.UK — Clean Air Zones vehicle checker

Manchester charges nothing and Birmingham charges you daily.

Greater Manchester replaced its proposed charging zone with an investment-led plan, so an identical older car costs nothing to drive there and £10 a day here. If you are choosing between English cities and already own a non-compliant vehicle, this is a live financial difference rather than a technicality — and it is why so many Birmingham residents inside the Middleway simply do not keep a car.

Source: GOV.UK — Clean Air Zones; Greater Manchester Combined Authority clean air plan

The 'designated country' list is the whole question, and people assume rather than check.

A designated-country licence exchanges with a form and a fee within five years of residency. Everyone else takes the full UK theory and practical tests regardless of decades of experience. The list includes some countries people expect and excludes others they assume are on it. Ten minutes on the DVLA site saves either an unnecessary driving course or a very unpleasant discovery in month eleven.

Source: GOV.UK — exchange a foreign driving licence

Three main-line stations within walking distance changes the maths on car ownership.

New Street, Moor Street and Snow Hill sit within a few hundred metres of each other and between them reach London, Manchester, the South West, Wales and every West Midlands town. Combined with the tram and buses, this makes Birmingham one of the easier large English cities to live in without a car — which, given the Clean Air Zone, is also the cheapest way to live near the centre.

Source: Transport for West Midlands

Common mistakes to avoid

Assuming a private car is exempt from the Clean Air Zone — Birmingham's is Class D and cars are in scope.
Judging compliance by the car's age rather than checking the registration against the official checker.
Assuming your country is designated for licence exchange without checking the DVLA list.
Driving past the twelve-month window on a foreign licence and voiding your insurance.
Buying a car before testing whether the trains, tram and buses already cover your week.

Some of this may be out of date. Spotted something inaccurate? Help us keep it right for the next newcomer.