I can't speak for outside of the US, but for IFR flight, altitude is to be +/- 100 feet of the assigned value in level flight. That being said, it usually takes a 300 foot difference to be questioned by ATC. Altitude is only reported by the transponder in increments of 100 feet and the correspondence error between the flight instrument and the encoder may not exceed 125 feet. Adding the 100 foot altitude limit to the maximum difference reported by the transponder, means your reported altitude can be 225 feet off of your assigned altitude and still be legal. Since the next value transmitted by the transponder is 300 foot difference from your assigned altitude, it can be used by ATC to determine if you are on altitude or not. When ATC inquires for your altitude, if you report more 300 feet or more difference from what they are receiving, they will require you to stop squawking altitude. If you happen to be +100 over your assigned altitude but your transponder is reporting +300 high, they will let you know that it is reporting 200 feet high. You won't have to turn off your altitude squawk, but would be expected to correct your altitude to the assigned value.
If you are using GPS altitude, it can differ from either pressure altitude or QNE by hundreds up to a thousand feet at higher altitudes. With warm weather, the GPS altitude will be higher than the baro altitude and lower than baro altitude on colder days. The only time the two can be expected to agree is when the aircraft is near the baro reporting station and on or close to the same altitude. If the reporting station is at standard temperature of 14 C, and the standard adiabatic lapse rate is the standard 2 degrees C, which it rarely is, then the difference between the two will be small. I would suspect that in the UK, you don't spend much of your time above 14 C, so most of the time the GPS altimeter will indicate below the baro when there is a difference. This means you should use an extra buffer if you want to keep clear if you are under-flying near controlled airspace, as the transponder will be reporting the higher value.
Here where I live in the Southeast US, the summer temperatures get well into the 30's and occasionally the low 40's, so the warm temperatures are an issue when following a GS if you assume it will clear minimum altitudes on an ILS further out on the localizer. In the UK, with this past winter and all the reported global warming white stuff, I doubt you have this problem. :)
