There's a lot of urban myth about this. In UK law the tolerance is actually 10% + 4kph, or 2.5mph, and it applies to the speedometer in the car, not to the true speed. This is merely a wiggle factor allowed for the speedometer in the car, which is allowed to read high up to the above formula, but never low.
So for a true speed of 70mph, the car's speedometer may legally display between 70 and 79.5. So it is not a excuse to speed, as the tolerance is only on the upside. A speedo that reads low is out of spec and illegal. Thus most cars have speedos that read a little high by design, in order to comply with this regulation. In my experience about 5% high is typical, so 73.5 indicated for true 70.
AFAIK any allowance by the cops over the true speed is entirely at their discretion. In theory you can still be ticketed for 71. IMHO this is a good thing, as it allows boy racers to surge along at an indicated 85, while still actually within what most cops would consider a safe envelope.
This policy is in everyone's interests:
- the car manufacturers like it because the wiggle factor means they can build the speedo to a lower, cheaper standard;
- the enthusiastic driver likes it because it gives an exaggerated impression of the car's performance (I was doing 100!^H^H^H^H90!);
- the authorities like it because it curbs excessive speed and thus enhances safety;
- we geeks tolerate it because we have our own independent measuring equipment.