There are at least four separate issues here.
1. Laws relating to the _ownership_ of lasers in the UK
2. Laws relating to the _use_ of lasers in the UK
3. Laws relating to the _importing_ of lasers into the UK
4. Laws relating to the _sale_ of lasers in the UK
Ownership
There are no laws in England dealing with the ownership of lasers in the UK. It is therefore legal to own lasers in the UK of any power.
Use
I recall reading in many places that the use of lasers > 1mw is "illegal" in the UK. However, I cannot find any law or regulation to this effect. I recently did a search for "laser" in a collection of all UK statutes and statutory instruments in the last 30 years and did not find any relevant entries. I have also searched the Health and Safety Executive website. Again, there is nothig to show any specific laws dealing with the use of lasers.
The position therefore seems to be that the use of lasers in the UK is merely subject to the general law. For hobbyists this means that it is legal to use lasers in public places (fields, parks etc) as long as you do so safely.. It might possibly be a nuisance at common law if you were to dazzle large numbers of people, but that is about it. Of course, that said, you should always use your common sense. Don't go shining high powered pointers at planes, police cars, people or through windows.
If you are an employer then you will be subject to Health and Safety Regulations. Again I cannot find any specific regulations on the topic, but I think there may be recommendations from the HSE that pointers used in lectures and other public displays do not exceed 1mw. This is sensible anyway.
I do not know what if any regulations there are dealing with public laser shows. If they exist, I have been unable to find them.
Importation
As far as I can tell, there are no restrictions on the importing of lasers into the UK at least by private individuals for private use. There was a recent case of a consignment of lasers being seized by customs:
http://news.bbc.co.uk/1/hi/england/suffolk/7710530.stm
However, I suspect this relates to sale (see below). The woman quoted says that the lasers in question "are way more powerful than is legally allowed in this country". I do not know what this is based on. She may have been misquoted or (more likely) she is simply wrong.
Sale
This is the grey area. There are no specific laws dealing with the sale of lasers. However, the General Product Safety Regulations make it illegal for companies to sell any product that is not a "safe product":
http://www.opsi.gov.uk/si/si2005/20051803.htm
As far as I know, no UK vendor has been prosecuted for selling high power pointers, but my guess is that the customs seizure above had something to do with these regulations.
So to summarise, English law is as follows:
1. There are no restrictions on owning high power lasers.
2. If you are a hobbyist there are no restrictions on using them, unless you break some other law in doing so.
3. There are no restrictions on importing them (at least if you are a hobbyist)
4. Shops may be taking a risk in selling high power pointers - but the position is unclear.
Hope the above helps (but given without any warranties......)