Customers of 123-Reg who have .co.uk domains may receive an email confusingly asking to activate said .co.uk domain.
This is either a bug or a bit of blatant marketing. Given 123's past mixups with mail such as sending out renewal reminders without actually specifying the domain name then I suspect the former.
Anyway, what they are offering is a year free with the corresponding .uk domain - your existing domain minus the ".co" bit. After that you pay annually.
It's generally not worth doing unless you want to keep the .uk out of the hands of anybody else.
Apart from that it's just an annoying sale gimmick.