What body shape and engine does your 3 series have?
If your main motivation is to save money, do some very in-depth calculations to see if it's worthwhile - changing to a newer car very rarely saves money unless you are significantly downgrading. I would say a 3 series to a V40 is not enough of a change, as they are in the same car category even if not necessarily aimed at the same market sectors. (Volvo are not even miles away from BMW in terms of brand position either, compared something like e.g. Vauxhall or Hyundai. I think you'll find you could spec one up very nicely.)
Depreciation is often the biggest cost in motoring and you'll be getting buckets of that if you go for a new car; look at how much you will lose in three years on the V40 compared to another 3 years in the BM, and how miles of petrol/diesel that will represent. Be careful with the claimed MPG, as it's all calculated according to the non-real-world New European Driving Cycle rules. Look at the honestjohn real MPG figures and use them as a basis; I'm not saying they'll be guaranteed the same as what you could expect, but more likely to represent real-world driving.
Again with road tax, compare against depreciation - even if the BMW was in the top tax band (£470/£490 by now?) the Volvo would cost you massive amounts more in depreciation in a year (£2000/year as a guesstimate). That £2K is on the conservative side, depending on spec you could lose £4K in the first year, and it could well be £8K-9K over three years.
In terms of size, I don't see a major difference: BMW is only about 16-20cm longer, 1cm wider and is slighty less tall than the V40. I don't see it's going to make a major difference when negotiating narrow roads and car parks, YMMV.
It sounds to me like you don't want to change, I certainly don't think you would save any money, and the size/space sounds like a minor consideration between the two. Based on those choices, I'd stick.