1) KNO3/sugar propellants are not classed as an explosive, and therefore exempt from requiring the user to get an explosives license.
2) A rocket that has a signalling device (high vis dye, magnesium flares, or pyrotechnic composition etc.) is not classed as a Section 5 prohibited weapon.
c.f.
Manufacture and Storage of explosives Regulations 2005 ( issued by the Health and Safety Executive)
LICENSING AND REGISTRATION REQUIREMENTS (EXPLOSIVES)
456 A licence is required for most maufacturing activities
457 Manufacturing includes processes where explosive articles or explosive substances are made or assembled. Regulation 9 gives advice on what activities are considered NOT to be manufacturing
Regulation 9.
1) Subject to paragraph (2), no person shall manufacture explosives unless he holds a licence for the manufature and complies with conditions of that licence.
2) paragraph 1 (above) shall not apply to:
a) the manufacture of explosives for the purpose of laboratory analysis, testing or demonstartion or experimentation ( but not for practical use or sale) where the total quantity of explosives being manufactured at any time does not exceed 100 grams, but nothing in this sub-paragraph shall be taken as authorising any acquistition or keeping of explosives for which an explosive certificate is required by virtue of regulation 7 of those regulations, without a certificate. ( eg: smokeless or shooters powder by firearm or shotgun certificate holders)
"manufacture" includes
a) in relation to explosive articles, their repair, modification, disassembly or unmaking.
b)in relation to explosive substances, their reprocessing, modification or adaptation.
Regulation 12
A Health and Safety License is required:-
(a) For the manufacture of all explosives.
HOME OFFICE FIREARMS LAW ( GUIDANCE TO THE POLICE)
Authorities under section 5 of the 1968 Act
3.20 Before a decision is made concerning a particular application for an authority the chief officer of police in the area from which the application has been received will be asked if they have any objections to the grant of the authority. If an authority is granted, it will be sent to the applicant and copied to the chief officer of police. As a matter of policy, the Secretary of State would normally only grant authorities to for those with a legitimate commercial need to possess prohibited weapons, rather than for private use or speculative business interest. The chief officer will be informed of any case which an authority is refused or
revoked.
Prohibited weapons include:-
3.2. vi) any rocket launcher, or any mortar, for projecting a stabilised missile, other than a launcher or mortar device designed for line-throwing or pyrotechnic purposes or as a signalling device.
vii) any weapon of whatever description designed or adapted for the discharge of any noxious liquid, gas or other thing.
x) any rocket or ammunition not falling within (viii) above which consists of, or incorporates, a missile designed to explode on or immediately before impact and is for military uses .
vii any cartridge with a bullet designed to explode on or immediately before impact, any ammunition containg or designed or adapted to contain any such noxious as is mentioned in ( viii ) above and if capable of being used with a fiream of any descritption, any grenade, bomb or other like missile, or rocket or shell designed to explode as aforesaid.