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Thanks for your replies, I am a newbie to PS so am on a steep learning curve so much appreciated!

Yes I want to create the levels first in artistic>cutout, so I effectively should be left with 8 levels max.

When working with a photograph, irrespective of the original image it seems to be difficult if not impossible to select the full 'coverage' of each of the 8 'tones' in one action (unless I am doing something wrong). I have tried adjusting the wand tolerance (between 1 & 30) but seems to have no effect, the wand is selecting several 'similar' tones in an area.

Should I be able to select all the occurrences of a particular tone in one go using the wand and thereby create 1 layer for that tone? 

As each of the 8 'tones' must have a 'value', is it not possible to select using this value thereby removing the need for manual selection/clicking etc? Imagine a complex image (eg a field of flowers) how difficult/time consuming it would be to manually select each spot that you 'think' is the same tone.

Or, is there not a way to display the range of tones in the image (like a palette) and allow selection from the palette?

Any help is much appreciated!