The Locomotive Act of 1865 , also known as the RED flag act , required –

1. Self-propelled vehicles to have a speed limit of 4 mph(6 Km/h) in country roads and 2 mph (3 Km/h) in city roads
2. It should have a crew of 3 – a driver, a stoker and flag man
3. The flag man need to carry a Red flag and walk 60 yards (55 m) ahead of the vehicle.
This effectively restricted the speed of the vehicle to the walking speed of the man carrying the Red flag. He has to warn the horse carriages about the self-propelled vehicle ahead and ensure that the driver stops the vehicle till the horse or the horse carriage passes by.
The amended Highway & Locomotive act of 1878 reduced the distance of the Red flag man to 20 yards but all the other conditions remained same.
Below is a depiction of the implementation of the red flag act –
These restrictive rules and regulations choked the development of the British Motor Industry , helped by the Railway and Horse carriage lobbies.
Finally , on 14 November 1896 , the new Locomotives on Highways Act 1896 was passed with the following changes and was applicable to vehicles less than 3 tons in weight.
1. Speed limit was increased to 14 mph (22 Km/h)
2. Was exempted from the 3 member crew as well as the Red flag
To celebrate this event, Harry Lawson of Daimler (England) and his friends organised for the London to Brighton “Emancipation” run. The London – Brighton run starts off with the symbolic tearing of the RED flag.  The London – Brighton run is being regularly conducted from 1927 till date.
The 1896 emancipation run –
By 1903, the speed limits were increased to 20 mph and later on the laws were repealed.