I think that policy varies depending on the threat.
In the case of Jean Charle Menezes - the Brazillian electrician, the claim was that they feared that he might be harbouring a bomb that he might detonate and so the strategy was to shoot for the base of the brain, hopefully to prevent any muscle activity from triggering any device.
Obviously they were very close at that time.
I'm not sure that the Police fully publish their policies but it's fair to assume that
a) after this case they would have been reviewed
b) range is a factor
I would imagine that MI5 were less than impressed with the Police's decision to shoot them.
Eyewitness accounts say that the attackers approached the police without raising their hands and that the Police simply shot them without a warning or attempting to arrest them.
In the time immediately after the incident it would have been important to the security services to ascertain if there were any continuing threat from other groups and it's a bit hard to interrogate people that you've just shot!
As it turned out this appears to have been an isolated incident but had we seen a second one some hours later in a different part of London I think there would be have been some internal discussion between the agencies about the decision to fire