The Law

The law relating to drugs in the UK is governed by the Misuse of Drugs Act 1971, although its application has been amended many times to keep pace with changing circumstances such as the appearance of new drugs of abuse.
The Act names three Classes of controlled drugs. Those drugs thought to be most dangerous are in Class A and those thought to be less dangerous are in Class B or Class C.

However, it should be noted that the likelihood of death, injury, mental disturbance or drug dependence is not necessarily any less for users of Class B or C drugs than it is for users of Class A drugs

Classes of controlled drugs:

Class A Drugs

Cocaine (including Crack)
Ecstasy
Heroin
LSD
Methadone
Morphine
Opium
Psilocin (magic mushrooms) - dried or stewed

Also:
Cocoa leaf
Dextromoramide (Palfium)
Dipipanone
Fentanyl
Mescaline
Pethidine
Any part of the opium poppy 'head' or seed capsule

Any Class B drug that is prepared for injection

Class B Drugs

Amphetamine
Barbiturates

Also:
Codeine
Dexamphetamine
Dihydrocodeine (DF-118)
Methaqualone
Methylamphetamine
Methylphenidate (Ritalin)

Class B drugs such as codeine and dihydrocodeine (DF118) are treated as Class A drugs when prepared for injection.

Class C Drugs

Anabolic Steroids (possession for personal use is legal in certain circumstances)
Benzodiazepine tranquilizers (e.g. Temazepam - although this becomes a Class A drug if prepared for injection)
Cannabis resin
Herbal cannabis
Dextropropoxyphene (Distalgesic)
GHB

Other mild stimulants similar to amphetamines

Offences under the Misuse of Drugs Act

Possession

If a person has controlled drugs in their physical possession - or has control of them - and is not entitled to do so (e.g. does not have a prescription) then they could be charged with this offence under the Misuse of Drugs Act. The charge may be:

Possession - i.e. being knowingly in possession of a controlled drug,
Joint possession - i.e. owning drugs jointly with other people, or
Past possession - i.e. having previously been in possession of a controlled drug.

An offence is committed if the smallest measurable trace of drug is involved, whether or not it is sufficient to cause intoxication.
The key elements of any offence are:

that the substance is or was in the person's possession or control;
that it is a controlled drug;
that the person knew that he or she possessed the drug.

Supply

The most common offence under the Misuse of Drugs Act relating to the supply of drugs is that of supplying a controlled drug to another person.
If a person physically delivers a controlled drug to another person they are supplying them with that substance and can be charged with that offence. Money does not have to be involved - it could be a gift - drugs do not have to be sold for an offence to be committed.

The quantity of drug involved is not relevant here - i.e. supplying even the smallest quantity of a controlled drug is an offence.
Other offences relating to the supply of a controlled substance are:

Possession with intent to supply:
The amount in question is not strictly relevant, although a the possession of a large quantity of a controlled drug may be considered as evidence of intent to supply. Similarly, possession of any quantity of a drug that has been divided into smaller quantities may be considered as evidence of intent to supply.

Offering to supply a controlled drug:
This offence is committed if an offer to supply a controlled drug is made, whether or not the offer is accepted.
An offence is still committed even if - on analysis - the substance is shown not to be a controlled drug.
Producing a controlled drug:
Unlicensed manufacture of any controlled drug constitutes an offence under the 1971 Act, for example, illicit manufacture of amphetamine powder or crack. Cultivation of cannabis plants is also classed as production of a controlled drug in the eyes of the law.
Knowingly allowing premises to be used for the production of controlled drugs is also an offence.

Penalties for conviction under the Misuse of Drugs Act

Maximum Penalties: Class A Drugs

Magistrates Court:
Possession - 6 months imprisonment or £5,000 fine - or both.
Supply - 6 months imprisonment or £5,000 fine - or both.

Crown Court:
Possession - 7 years imprisonment or unlimited fine - or both.
Supply (or possession with intent to supply) - Life imprisonment or unlimited fine - or both.

Maximum Penalties: Class B Drugs

Magistrates Court:
Possession - 3 months imprisonment or £2,500 fine - or both.
Supply - 6 months imprisonment or £5,000 fine - or both.

Crown Court:
Possession - 5 years imprisonment or unlimited fine - or both.
Supply (or possession with intent to supply) - 14 years imprisonment or unlimited fine - or both.

Maximum Penalties: Class C Drugs

Magistrates Court:
Possession - 3 months imprisonment or £500 fine - or both.
Supply - 3 months imprisonment or £2000 fine - or both.

Crown Court:
Possession - 2 years imprisonment or unlimited fine - or both
Supply (or possession with intent to supply) - 14 years imprisonment or unlimited fine - or both.
Production (including cultivation - e.g. of cannabis) - 14 years imprisonment or unlimited fine - or both