Luxury Car Tax: How to Avoid the Extra Cost
Buying a luxury car can be an exciting experience, but the added cost of the luxury car tax can take some of the shine off this joy. From April 1, 2025, if your car originally cost more than £40,000, you’ll be forking out an extra £425 a year for the second through to the sixth years it’s on the road. Plus, the luxury car tax will also apply to electric cars from April 1, 2025.
But there’s a clever way to keep a premium car and avoid this additional tax—buy a used one that’s over six years old. If you want to steer clear of those steeper emissions-based tax bands during the first year, then you’ve hit the jackpot. Here are some of our favorite premium cars that let you avoid the luxury car tax.
Premium Cars Now Exempt from Luxury Car Tax
Here’s a list of premium cars that are exempt from luxury car tax:
- BMW M4 (up to 2017)
- Volvo XC90 (up to 2017)
- Tesla Model S (up to 2022)
- Mercedes GLE Coupe (up to 2017)
- BMW iX (up to 2025)
- Mercedes EQS (up to 2025)
- Range Rover (up to 2017)
- Mercedes S-Class (up to 2017)
BMW M4 (up to 2017)
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There’s often a clear distinction between performance vehicles and luxury cars, but the BMW M4, produced between 2014 and 2020, effortlessly blends the two. Building on the foundation of the 4 Series, the M4 presents itself with a broader stance, an extremely powerful 419hp twin-turbocharged six-cylinder engine, and an exhaust note that captivates. If you were to buy this car brand-new in 2017, it could have cost you upwards of £120,000, but now used prices are less than half of that. If you buy one from 2017 or earlier, you won’t have to worry about paying luxury road tax as it is more than six years old.
Volvo XC90 (up to 2017)
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Luxury SUVs are a popular choice. A used Volvo XC90 exemplifies luxury. The car offers some of the comfiest seating you’re likely to experience, complemented by high-quality materials used throughout the interior. You can usually pick up an older model at a great price. A new 2017 XC90 would have set you back £60,000+, but today, you could save half of that amount without having to worry about the extra £425 tax each year.
Tesla Model S (up to 2022)
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New electric cars registered from April 1, 2025, onwards are also subject to the luxury car tax, making a used model even more appealing. If you desire luxury, then a used Tesla Model S is perfect. Tesla discontinued sales of the Model S in the UK in 2022 to concentrate on SUVs, which means you’ll have to look at the secondary market. However, even a 2022 model still gives you a range of up to 394 miles. They generally cost around £80,000 when new. Used ones are significantly cheaper to buy and operate, especially if you can charge at home.
Mercedes GLE Coupe (up to 2017)
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Mercedes has been manufacturing premium cars for what seems like forever, which explains why their models, like the GLE Coupe, are top-notch. If you’ve relaxed in a modern Mercedes, you’ll understand what we mean. Imagine a first-class aeroplane seat with a steering wheel and wheels.
A GLE Coupe in 2017 would have cost upwards of £100,000, but today, they’re much more affordable with a few miles on the clock.
BMW iX (up to 2025)
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Similar to their petrol-powered relatives, luxury electric SUVs are also incredibly popular these days. The BMW iX is perfect. It is a class-leading luxury car, electric car, and SUV all in one. With a 380-mile range, a lot of power, and a premium interior, it makes an excellent choice for families. They are also incredibly expensive when new (around £120,000 for a top version), so buying a used one in the specifications you want means you’re in for a treat.
Mercedes EQS Saloon (up to 2025)
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Like its BMW rival, the Mercedes EQS Saloon is one of the most luxurious electric cars available. It has an extra-efficient 481 miles of range. They cost up to £160,000 when new.
Read more about the Mercedes EQS
Range Rover (up to 2017)
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Nothing surpasses a full-size Range Rover when it comes to luxury and overall premium feel. That is reflected in what owners and reviewers say, as well as its price. When new, these vehicles can easily exceed £100,000, but a used one is far less expensive. You also avoid the luxury car tax. The plug-in hybrid Range Rover has improved fuel economy (and lower emissions).
Mercedes S-Class (up to 2017)
There’s a reason why business people throughout the country use a Mercedes S-Class to get around. In addition to being quiet and refined, there’s enough room to work from the back. While the price is high from the start, a used one more than six years old gets loads of luxury at a much more attractive price.
