It was in 1920. The Government was concerned after the Bolshevik Revolution in Russia and stirring in Canada and elsewhere that there may be troubles in the UK from people rising up. That is why by the late 1930s they were asking the US for any arms we could spare for the home guard.
There is a good article here:
http://members.aol.com/gunbancon/Laws.html?f=fs
And an extract from the article:
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Whilst the pre-war anarchists had not been regarded as a real threat to the government, it is clear that the cabinet thought that Communism may have wider support among the lower classes, the unthinking mass of labour. The cabinet was told:
"A bill is needed to license persons to bear arms. This has been useful in Ireland because the Authorities knew whom was possessed of arms."
The 1920 act was the result. Whilst the Home Secretary Edward Short reassured the House the Bill was necessary to to safeguard the public from crime, the cabinet discussed strafing the working class from the air. Twenty years earlier the government had put its faith and its trust in the decency and patriotism of the working class, exemplified by the founding of the Society of Working Men's Rifle Clubs. In the paranoia of the times, the government felt it could no longer trust the working class and sought to deny the working man access to firearms. At the same time it sought to ensure that:
"weapons ought to be available for distribution to friends of the Government."
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That about sums it up. In 1920 the authorities did not trust the lower classes and thought that weapons belong only in the hands of the friends of the government.