Roughly 3 million new cars are sold in the UK every year, and about 85% of those are financed via deals similar to the OP's and the one i've just signed up to, so deals of this nature are very much the norm. The stigma attached to financing a car is a really old fashioned point of view in my opinion.
You're right though - its obviously cheaper to buy a used car rather than new, but its also a choice - I chose for the first time in my life to splash out on a new car as a treat to myself (at age 34, same as you Andy!). Even if I had £40k cash spare, I wouldn't be spending it on a car.
And again - saying if you care about a £500 tax bill you cant afford to buy the car, its utter tosh! I care about the tax bill and I can afford the car! You don't get rich by throwing money away.