Legal Tender

Legal tender is money that must be accepted by the courts if you offer it to pay a fine or settlement of debt. If the debtor offers to pay with legal tender then they cannot be sued for failure to pair. This is such a narrow and technical definition that it has very little relevance in most situations. So, for example, there is no compulsion for either party in a random transaction to pay with or accept legal tender.

There is a maximum number of coins that count as legal tender for each type of coin. This is to stop people playing with loads of tiny coins. Here's a list from the Royal Mint website:

£100 - for any amount
£20 - for any amount
£5 (Crown) - for any amount
£2 - for any amount
£1 - for any amount
50p - for any amount not exceeding £10
25p (Crown) - for any amount not exceeding £10
20p - for any amount not exceeding £10
10p - for any amount not exceeding £5
5p - for any amount not exceeding £5
2p - for any amount not exceeding 20p
1p - for any amount not exceeding 20p

So you can only use 10 2p coins at once, which is fairly low. If you looked at the list and saw the oddities of £100, £20, £5 and 25p then they do exist, but mostly in a ceremonial role. Here's a picture of the latest £100 coin:

Bank of England notes are legal tender in England and Wales, however Scottish banknotes, while commonly accepted, are not legal tender. This is contrary to what is usually claimed. Interestingly Scottish notes are not even legal tender in Scotland, only their coins.

Maundy money are collections of silver coins given out by the monarch roughly once a year. They are thrown out in little leather pouches and their face values are 1p, 2p, 3p and 4p. However their real values are far, far higher to coin collectors. They too are legal tender (bizarrely).

Maundy Money from 1818