Introduction
The source document for this information is contained in the UK ANO Rules of the air, in particular Rule 5. It is important to read this rule carefully, but its content is summarised here.
500 Rule (Rule 5e)
This rule states that: An aircraft shall not fly any closer than 500 to any person, vessel, vehicle or structure It does not mean that you cannot fly below 500. As long as there are no persons, vessels, vehicles or structures in the area (below or 500 to the side) then you may fly as low as you like. For example over a large lake with no boats or swimmers you can fly at one foot altitude if you wish. The same applies over a deserted moorland with no fences or tractors around. However, since it is very hard to determine what structures etc may be in the vicinity (and in the interests of safety), 500 should be regarded as a minimum for most purposes.
There are of course exceptions to this rule:
Police aviation operations
Officially organised Air Displays
Taking off or landing in accordance with normal aviation practice
A glider which is hill soaring
Picking up or dropping banners etc at an aerodrome
Note that the exception for take off and landing specifies in accordance with normal aviation practice. This means that you cannot practice an engine failure after take off below 500 or descend to below 500 in the exercise (unless the climb out path was over the sea for example), since this is not normal aviation practice.
1500 Rule (Rule 5a)
This rule states that: An aircraft shall not fly over any congested area of a city, town or settlement below
Such height as would enable the aircraft to alight clear without danger to persons or property on the surface, in the event of the failure of a power unit. (If such an aircraft is towing a banner, such height shall be calculated on the basis that the banner shall not be dropped within the congested area) or
A height of 1500 above the highest fixed obstacle within 600m of the aircraft
--Whichever is higher
The ANO defines a congested area as: Any area which is substantially used for residential, industrial, commercial or recreational purposes. Helicopters have slightly different rules not covered here.
So in the vicinity of built-up areas, we must maintain a minimum of 1500 above the highest obstacle within 600m. If the built up area is very large, eg London, then clearly 1500 is not enough height to glide clear in the event of an engine failure, so we would have to fly higher than this. We cannot plan to force land in Hyde Park since this would clearly represent danger to persons and property on the surface. For this reason, only multi-engined aircraft fly over Central London.
Again there are some exceptions to this rule:
On Special VFR flight, the part about 1500 within 600m is waived, but not the requirement to land clear.
On special routes notified for the purpose (usually entry and exit lanes to airports in or near control zones)
Police Aviation Operations
Taking off or landing at licensed aerodromes.
Open Air Assemblys (Rule 5d)
This rule states that:
An aircraft shall not fly over or within 1000m of any assembly in the open air of more than 1000 persons assembled for the purpose of witnessing or participating in any organised event.
Below such height as would enable it to alight clear of the assembly in the event of the failure of a power unit. (If such an aircraft is towing a banner, such height shall be calculated on the basis that the banner shall not be dropped within 1000m of the assembly)
So note that we cannot fly within 1000m (about 3300) either overhead or to the side.
Interestingly, note that we cannot fly overhead an any altitude. In theory this means that a 747 cannot fly over an open air rock concert even at 39 000. This is clearly ridiculous, and so another paragraph is included as follows:
Where a person is charged with an offence under the order ..... it shall be a good defence to prove that the flight of the aircraft ..... was made at a reasonable height and for a reason not connected with the assembly..... Thus although technically in breach of the rule, a prosecution would be unlikely.
Exceptions to this rule are:
Police operations
When written permission of the CAA has been obtained
Officially organised Air Displays