Hi everyone!
Just got off the phone with Apple Support and was told that they're aware of the issue and it is software related.
The current workaround is to turn FileVault off, as it is "jamming up the Bluetooth I/O".
I've only just done this myself so not sure if this has solved the problem, but thought I'd let everyone know.
One thing worth noting, Apple Support mentioned that my vote on the issue for priority on a fix was added to the list, so if you are having this issue too it'd be worth giving Apple a call to get your vote in (obviously pretty frustrating this isn't a top priority anyway).
In the meantime hopefully we have a workaround to this issue.
I'll post an update if my Magic Mouse disconnects again.
its good that apple acknowledged the problem, my filevault has always been off and these issues still occur...