If you are planning to remove or abstract more than 20m3 (20,000 litres or approx. 4,400 gallons) of water per day from a watercourse you will need an abstraction licence, even if the water is later put back into the watercourse. This means that virtually all micro hydro projects will require such a license, as even a flow rate of 1 litre per second amounts to 86m2 per day.
The license must be sought from the Environment Agency, who will assess effects on river ecology and flooding, prior to installation. The Environment Agency recommends that you contact them as early as possible as it can take around 3 months to get the license. For further information, consult the Environment Agency's document "Abstracting water - A guide to getting your licence".
It's also worth discussing details with local planning officials, as the powerhouse ans pipework may require planning permission.
If you don't own the land involved you'll need to seek permission from the landowners.