Heath, who was Britain's premier between 1970 and 1974, is alleged to have raped an 11-year-old boy during a paid sexual encounter, officers revealed following a mammoth two-year investigation.
Heath, who died in 2005 aged 89, would have been interviewed under caution over seven allegations dating between 1961 and 1992, including two adult men.
"Sir Edward Heath was an extremely prominent, influential and high-profile person who was arguably one of the most powerful people in the world," Wiltshire police chief constable Mike Veale said, announcing the investigation's findings.
The 1.5-million-pound (USD 2 million) probe was triggered in 2015 after Heath was named as a suspect in an investigation into so-called historical child sex abuse.
Of the 42 allegations made against Heath, seven would have warranted him being questioned by police.
Six people named Heath in accusations of satanic or ritual abuse, but police found no corroborative evidence.
The number of abuse allegations being made has surged since one of the BBC's top presenters, Jimmy Savile, was exposed as a serial paedophile after his 2011 death.
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