These cool cars will be tax exempt from 2026
December 23, 2025 by Jamie Edkins
Car changing is a big deal
Don’t fancy paying any car tax? Well from 2026 these five cool cars will be completely tax exempt.
There are loads of reasons to buy a classic car. They look cool, they’re refreshingly simple thanks to a lack of beeps and bongs and a lot of them will hold their value as well.
Plus, if you go for one which is over 40 years old, they’re exempt from road tax as well. You do still have to apply for it each year, but it won’t cost you a penny. There’s a cheeky little saving for you.
There are quite a few cool and interesting classics which will be turning 40 in 2026, and here are five of our favourites.
1. Ford Sierra RS Cosworth – £50,000 – £100,000
The Sierra RS Cosworth is one of the most legendary fast Fords of all time. Based on the controversial “jelly mould” Sierra, it used a 2.0-litre four-cylinder engine with a turbocharger the size of a wheelie bin strapped to it.
The result was plenty of 1980s turbo lag when you put your foot down, followed by a ballistic explosion of power once everything had spooled up. It could do 0-60mph in 6.2 seconds before going on to a top speed of 150mph, and this performance combined with some pretty low-tech security measures made it hugely popular with thieves at the time. It wasn’t like plod’s Astra could catch up.
2. Peugeot 205 GTI 1.9 – £10,000 – £30,000
The Peugeot 205 GTI launched in 1984 with a 1.6-litre engine, but it was in 1986 that it launched the 1.9-litre version which we all lust after today. The 205 was one of the definitive ‘80s hot hatches, offering agile handling and decent practicality in a stylish shell.
That 1.9-litre engine put out 130hp, not masses by modern standards but plenty in a tin can weighing only 900kg. Its main rivals at the time were the Ford Fiesta XR2i, the Citroen AX GT and of course the classic Mini, but in reality the Peugeot was always the best.
3. BMW E30 M3 – £60,000 – £100,000+
The first ever BMW M3 is also turning 40 this year, but the E30 is a very different proposition to the M3 we know today. It used a 2.3-litre four-cylinder engine with a modest 215hp – a far cry from the six-cylinder, 550hp beast on sale now.
It was built as a homologation special so that BMW could go racing, so the styling was ever so slightly different to the standard 3 Series of the day. News editor Jamie Edkins has driven an E30 M3, so check out his review to find out more about this iconic sports car.
4. Jaguar XJ40 – £2,000 – £10,000
Looking for a slice of old British luxury? Well the Jaguar XJ40 is a great way to enjoy Champagne motoring on a lemonade budget. It was released in 1986 as the long-awaited replacement for the aging Series 3 XJ, and it was never as well-loved as that car.
But as a result you can now pick up an XJ40 for peanuts. It was sold with a choice of straight-six or V12 engines, and the former is probably a better bet if you’re worried about running costs. Then again, neither car will be cheap to run.
5. Toyota Supra A70 – £10,000 – £50,000
Finally we have the third-generation Toyota Supra. This one lives in the shadow of the more popular Mk4, but it’s still well worth a look with its retro styling, pop-up headlights and powerful 3.0-litre engine.
In 1987 there was also a Turbo version, although you’ll have to wait until 2027 for that one to be tax exempt.
Before you buy
There are a couple of things to consider before buying any of these cars. First off, in order for a car to be tax exempt it has to have been 40 years since the date of registration. So if your car was registered in May 1986, it won’t be tax exempt until May 2026.
And while you will save on tax, we’re being a bit tongue-in-cheek about this being a good way to save money. Classic cars require plenty of love and care to keep them on the road, and the cost of maintaining one will almost certainly outweigh any savings you’ll make.
Car change? Carwow!
Looking for a new set of wheels? With Carwow you can sell your car quickly and for a fair price – as well as find great offers on your next one. Whether you’re looking to buy a car brand new, are after something used or you want to explore car leasing options, Carwow is your one stop shop for new car deals.
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