Need good quality 7.1 surround sound system
£250 – £750
What is your budget? There’s no way to answer this question without knowing how much you are willing to spend.
Update:
For that price range, you may be happier with a good 5.1 system. Most Blu-ray movies still aren’t recorded in 7.1 even though the capability is there. Plus with 7.1, you need to have a big enough room that your rear speakers are at least a few feet behind your listening position, or the effects won’t sound right. Doing a quick search I came up with this:
http://www.richersounds.com/product/av-receivers/onkyo/txsr507/onky-txsr507-blk
http://www.richersounds.com/product/speaker-packages/kef/kht1005.2/kef-kht1005-2-blk
I don’t really know much about prices and dealers in the UK, so you might be able to find a better deal if you look around.
When looking for receivers, I’d recommend whatever you can find from Onkyo that’s in your price range (also try used or refurb). Anything from Denon, Yamaha, or Pioneer will also be good. Stay away from Bose (over priced and under performing), Sony (great TVs, horrible audio), or any of the small "home theater in a box" setups.
For speakers, try KEF, Mordaunt Short, or American brands like B&W, JBL, Infinity or Canadian brands like Paradigm or PSB (I don’t know what you’ll be able to find in the UK).
Try to spend a little more than half of your budget on the speakers.