Automotive History: The Road Fund Licence From 1747 To Paperless


2014 tax disc-1

Taxing motor vehicles has always been a sensitive subject for any government and for owners and drivers, but I suspect not too many countries can claim use of a system that goes back to 1747.  Look closely at any of the photos of British cars on CC, and you’ll see a three inch paper disc in a plastic holder in lower left corner of the windscreen. That is the tax disc, and this is it its story.

1977 tax disc

From 1747, all horse-drawn carriages in the United Kingdom with two or more horses (so not the basic horse and cart) were subject to an annual tax to pay for road maintenance. Previously, many roads had been individually tolled by various owners and counties. Essentially this was a tax for the use of the road, and is the origin of the term “road tax”, still used today, if inaccurately. By 1889, this was £2 and 2 shillings each, or what was known as 2 guineas–say £150 now–and it was in this period that the first printed paper licenses were issued.


By the end of the 19th century, motor vehicles were appearing on Britain’s roads, and inevitably many pieces of legislation followed. A major one of these was the 1896 Locomotive Act, which removed the requirement for all self-powered locomotives to be preceded by a man carrying a red flag as a warning, and raised speed limits to 14 mph. Of course, the vehicles it covered were almost universally steam-powered but it caught early cars as well. This date is still marked today by the annual London-Brighton (around 60 miles south of London on the south coast of England) run for vehicles built before 1905, and attracts around 400 vehicles every November.

Another was the 1902 Motor Car Act, which required all cars to be registered and licensed by the relevant County Council for an annual fee (as an upside, the speed limit went up to 20 mph). This was the first road fund tax, although officially it was (and still is) an excise duty, and was set at £1 for each vehicle. From 1909, the declared plan was that the UK’s road system would be self financing, from vehicle excise duty which would be dedicated to road building and maintenance.

Also from 1909, the (in)famous RAC horsepower (a purely nominal use of the term with no relation to brake horsepower) rating was established and used for vehicle taxation. It was based on the bore and number of cylinders, so to manufacturers built long stroke engines to get round it. Amongst its effects, intended or otherwise, was an element of protectionism, and the reverse–a lack of international appeal. The rate in 1909 was £1 (say £60 now) per RAC horsepower.

450_taxdiscIn 1920, the Roads Act brought all these ideas together–a duty on county councils to collect the annual vehicle excise duty, for these funds to be ring fenced for the road system maintenance and building, and for all vehicles to display a vehicle licence disc, commonly known as the tax disc, still with us 94 years later.

The first examples were plain grey on white, and were said to resemble a contemporary Guinness drip mat, to the extent that the drip mat could make a plausible substitute at a quick glance

By 1923, colour was making an appearance, making forgery harder and compliance checks easier, and in 1927 Winston Churchill, as Chancellor of the Exchequer, formally removed the ring fencing of vehicle excise duty to road maintenance and building.


The excise rate was dropped in 1935 to 15 shillings (75p or around £30.00 now) for each RAC horsepower, as a stimulant measure for the motor industry, and the disc edge was perforated in 1938. This lasted until 1942, and did not reappear until 1952, as the necessary equipment was damaged or lost during the war.

1952 tax disc

In 1948, the RAC horsepower rating was abandoned to be replaced by a flat rate of £10 a year, say £250 now. In 1961, the concept of taxing a car for 12 months was introduced, rather than just until the end of the year. Yes, every car had to be re-taxed on 31 December… by reporting to an office with the necessary registration documents!


Perhaps the biggest change to the administration of the process came in 1974 when responsibility was moved from county councils to a new (computer controlled!) Government agency known as the Driver and Vehicle Licensing Centre in Swansea, south Wales. The DVLC (or now DVLA, for Agency) is known almost universally as “Swansea”, as in “I’ve sent the paperwork to Swansea”, and is either a successful example of geographically distributed government employment or the biggest administrative black hole yet created.

1974 tax disc

Since 2003, the rate charged for new cars has been based on the CO2, ranging from nil (tax-free) for cars with a CO2 rating of less than 100g/km to £490 for those over 225g/km. Although the difference between a modest car and a slightly less modest car is, in the scheme of car purchase and running costs, relatively small, the number of times you hear someone say that a car was chosen for its lower excise duty is surprising. It is therefore one of the more successful “nudge” policies seen in the UK. Also, cars first registered before 1973 are exempt, as are police and health service vehicles.


The first of October this year begins the next major change–the system will go entirely paperless. It has been possible to buy the tax disc on-line for several years now, as well at a post office, but displaying the tax disc in the windscreen (as well as having one) has always been an obligation, and omission a finable offence. But now the tax disc is going, and no more are being issued. Enforcement will be entirely by on-line check or by registration plate recognition camera spotting.

Sept 2014 tax disc

It is already a requirement to tax a car or declare it to be off-road–not taxing and not reporting is not an option.  But the loss of the tax disc is quite a step, even if merely an emotional one. There is now nothing tangible to see for your money, and nothing to haggle over when selling or buying a used car. A line like “6 months tax” is common in a used car advert and unused tax a tool to use when trading in, but tax will now be linked to the owner and will be credited when the car is re-registered. Partly this is to keep it simple, but it is also an incentive to accurately and promptly report ownership changes – another nudge.

Driving a car, and seeing cars, without a tax disc is going to take a bit of getting use to for us Brits–after all, we’ve had them for 94 years and the system for over 260 years!