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Best cars for under £40k to beat the tax hike

Spend over £40k on a new car from 1 April, and you’ll pay a £310 annual fee for 5 years. Here are the best cars beneath the threshold

New cars with a list price above £40,000 will soon carry a £310 annual five-year surcharge under the new tax rules coming into force on 1 April, hitting most premium models. But if you pick the right spec and trim, and choose your options wisely, you can avoid the supplement. We crunched the numbers to show you how to shop.

What is a list price?

According to the Driver and Vehicle Licensing Agency, cars with a list price exceeding £40,000 will be subject to the £310 annual charge. The DVLA defines list price as “the list price of the vehicle published by the manufacturer, with any options added before the vehicle is first registered”.

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• 2017 UK car tax changes explained

It also includes manufacturer options, VAT, pre-delivery inspection and delivery charges, as well as the cost of the battery for electric cars. Things like registration fees, warranties or other incentives are not included, though.

Below are the best cars you can buy for under £40,000

Alfa Romeo Giulia

Model: Alfa Romeo Giulia Veloce 2.0-litre petrol (280)Total: £39,375Base price: £37,880CO2: 141g/kmCurrent tax rate (first year/annual): £145/£145New tax rate (first year/annual): £200/£140Options: Metallic paint (£695), Driver assistance pack (£550), Climate pack (£250)

Alfa Romeo’s entry-level petrol Giulia starts from just £29,480, but those wanting performance figures closer to the range-topping £61,000 Quadrifoglio can opt for the Veloce trim.

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Priced from £37,880, it comes with a 276bhp 2.0-litre petrol engine. The Veloce gets Alfa Red paint as standard, but other colours will cost. Other features include sat-nav, DAB radio plus autonomous braking and lane departure warning. 

Audi Q5

Model: Audi Q5 2.0 TDI SE Quattro S tronicTotal: £39,300Base price: £36,355CO2: 132g/kmCurrent tax rate (first year/annual): £130/£130New tax rate (first year/annual): £200/£140Options: Metallic paint (£645), Technology pack (£1,600), Virtual Cockpit (£250), Reversing Camera (£450)

The Q5 has been one of the best-selling premium SUVs on the market, and Audi has just introduced an all-new model. It now sits on the VW Group MLB platform that also underpins the larger Q7. Although all versions of its bigger brother breach the £40,000 mark, the Q5 2.0-litre TDI SE starts from £36,355.

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We’d specify £645 metallic paint, plus the £1,600 Technology Pack, which brings sat-nav and 4G Internet. The £250 Virtual Cockpit is another worthy addition, as it replaces the instruments with a 12.3-inch LCD display. 

BMW 5 series 

Model: BMW 520d SETotal: £39,835Base price: £36,270CO2: 108g/kmCurrent tax rate (first year/annual): £0/£20New tax rate (first year/annual): £140/£140Options: Metallic paint (£675), Adaptive Cruise Control (£965), Driving Assistant (£895), Parking Assistant (£695), folding mirrors (£335)

The new 5 Series is available with some of BMW’s cleverest autonomous tech, and it’s not just reserved for flagship cars. An entry-level 520d with a 188bhp 2.0-litre diesel starts from £36,270 and comes as standard with features like sat-nav and parking sensors. This means there’s plenty of room to add BMW’s autonomous tech and keep it under £40,000.

Jaguar F-Pace

Model: Jaguar F-Pace 2.0-litre Prestige (auto)Total: £39,910Base price: £38,830CO2: 139g/kmCurrent tax rate (first year/annual): £130/£130New tax rate (first year/annual): £200/£140Options: Metallic paint (£705), rear-view camera (£365)

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Our reigning Car of the Year starts at just below £40,000 in the entry-level 2.0-litre diesel spec with an auto gearbox. Manual Jaguar F-Paces cost from £35,020, but the ZF eight-speed auto suits the car far better. You also get essentials like sat-nav, parking sensors and automatic emergency braking as standard. We’d recommend metallic paint, because the F-Pace comes only in black or white as standard, plus the rear-view camera to help you manoeuvre.

Land Rover Discovery Sport

Model: Land Rover Discovery Sport 2.0-litre TD4 Diesel auto (180) SE TechTotal: £38,720Base price: £36,350CO2: 139g/kmCurrent tax rate (first year/annual): £130/£130New tax rate (first year/annual): £200/£140Options: Metallic paint (£625), All Terrain Progress Control (ATPC, £180), Adaptive Cruise Control with Queue Assist (£1,220), Rear View Camera (£345), Wi-Fi Hot Spot (£0)

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The Discovery Sport is now a few years old, and has just been joined in the range by an all-new version of its bigger brother, the Discovery. But that does little to dent the smaller SUV’s appeal.

For one, it starts well below the £40,000 limit, while the Discovery pushes above this even in the most basic spec. In SE Tech trim, Discovery Sport buyers get things like sat-nav, parking sensors and emergency brake assist as standard. Keen mud-pluggers should opt for Land Rover’s All Terrain Progress Control system, which automatically adjusts the car’s speed during off-road driving, while those covering motorway miles will benefit from adaptive cruise control.

Lexus NX

Model: Lexus NX 200t F SportTotal: £39,595Base price: £39,595CO2: 183g/kmCurrent tax rate (first year/annual): £335/£230New tax rate (first year/annual): £800/£140Options: None

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Lexus’s NX is an attractive proposition. The unique styling distinguishes it from other SUVs straight away, while the car comes only in hybrid or turbo petrol guise.

The hybrid starts at £30,995, but if you want the 2.0-litre turbo petrol NX 200t F Sport, you’ll need to stump up just short of £40,000. Going over this means you’ll pay £310 extra annually for five years, which some buyers may consider as key features like sat-nav aren’t included.

Mercedes GLC

Model: Mercedes GLC 220 d 4MATIC SETotal: £38,985Base price: £35,500CO2: 129g/kmCurrent tax rate (first year/annual): £0/£110New tax rate (first year/annual): £160/£140Options: Executive package (£1,295), metallic paint (£645), Air body control (£1,495)

In 2015, Mercedes brought out the GLC to plug the gap in its model line-up and to rival the BMW X3 and Audi Q5. Like its competitiors, the GLC majors on comfort and refinement, and the optional air suspension makes the ride even smoother. Basic colour options are limited, so we’d go for the metallic paint for £645, while the Executive package adds things like autonomous parking assist. 

Volvo S90

Model: Volvo S90 2.4D D5 (235) AWD auto MomentumTotal: £39,555Base price: £39,555CO2: 127g/kmCurrent tax rate (first year/annual): £0/£110New tax rate (first year/annual): £160/£140Options: None

The entry-level S90 D4 Momentum starts from £32,955, but buyers keen on all-wheel drive and Volvo’s more potent 235bhp D5 diesel will have to fork out £39,555.

This starting price rules out the usual extras, such as metallic paint (£700), although the S90 comes as standard with key features like sat-nav, parking sensors, adaptive cruise control and a lane departure warning system as standard. Most cost options aren’t really essentials.

Find out everything you need to know about the new car tax changes right here...

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