A record price has been set for a British vehicle registration number after a businessman paid £440,625 to buy the Formula One initials F1.

Afzal Khan, 37, smashed the previous record of £331,000, paid 18 months ago for M1, to purchase the historic F1 number plate from Essex County Council.

The Bradford entrepreneur, who owns a specialist car design company, plans to display the number plate on his £317,000 Mercedes SLR McLaren supercar.

F1 was the first number plate issued by the Essex County Register of Motors in 1904, the year it became compulsory for motor vehicles to bear a registration plate.

Its first owner was the Essex county surveyor, Percy John Sheldon, who attached it to his 15hp, four-seater Panhard Levassor.

After a period in private hands it was given back to the county council in 1955 and subsequently used on a variety of civic limousines including a Darracq Torpedo, a Humber, a Daimler and a Jaguar.

The authority will use its windfall to fund an advanced driver training programme to improve the skills of hundreds of young motorists in Essex.

Lord Hanningfield, the council leader, said he was pleased that the money was being put to such a cause.

"It will be with some sadness that we will be losing this little piece of Essex history but we have sold it at a time when such number plates are reaching very high sale prices on the market and we have reached a deal which breaks all previous records," he said.

Mr Khan, the owner of Khan Design, which describes itself as "the most successful automotive design house in the UK", said that he had been tracking the F1 plate for a number of years. He believes that he has purchased a bargain.

"I think it's a good price to pay because it's probably worth 10 times that," he said.

"I am privileged to have acquired such a prestigious plate and I'm extremely happy that the money raised from the sale will help improve road safety through the training of young drivers."

Mr Khan's total investment of £440,625 (£375,000 plus VAT) beats the £331,000 paid by a Cheshire businessman in July 2006 for the number plate M1, apparently as a present for his son's sixth birthday. In April 2006 a Sikh businessman paid £254,000 for the number plate 51 NGH (spelling the name Singh).

The world record price for a registration plate, £3.5 million, was paid at an auction in Abu Dhabi last year by a prominent Gulf businessman, Talal Ali Mohammad Khouri, for the single-digit number 5.That record is expected to be broken later this year, when Abu Dhabi Police auction the most sought-after number plate in the United Arab Emirates, the single-digit 1.