Depends on the local countries regulations.
First of all, where in the FAR is an instructor required to log time as an instructor? Nowhere. So that's why it's not in the FAR.
No FAA rules prohibit you from giving instruction in an aircraft of non-US register. No rules prohibit you from giving instruction outside the US.
However, generally, you can only log instruction if you are authorised to give instruction. As you are flying a G-registered aircraft and flying in the UK, you must be bound by the rules of the country of registration. That means, if you are authorised to give instruction under the JAA system you could log it as instruction.
Just because you are sitting next to someone and you are a CFI doesn't mean that you can log that you are giving instruction.
I don't know enough about the JAA (maybe someone can help out here).
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