Reforming the law on donations to political parties

Approximate read time: 9 minutes

The House of Lords is scheduled to consider the following question for short debate on 12 February 2026:

Lord Sikka (Labour) to ask His Majesty’s Government what plans they have to reform the law on donations to political parties.

1. Current rules on donations to political parties

Political parties in the UK generally receive most of their funding from donations and loans.^[1] They may also receive fees from registered members and supporters and benefit from direct and indirect state funding.

The Political Parties, Elections and Referendums Act 2000 (PPERA) introduced rules on how certain donations and loans to political parties registered in the UK must be recorded and reported.^[2] The act also established the Electoral Commission, which acts as the regulator for political finance in the UK and publishes details of reportable donations received by political parties.^[3]

Under the current legal framework, political parties can only accept donations above £500 from permissible donors and are legally required to check the permissibility of a donor before accepting donations.^[4] The Electoral Commission explains what this means in practice:

Anyone can give a donation or loan to a political party, individual or other organisation. There is no limit on how much someone can give if they are a permissible source.

It is up to the political party, individual or other organisation to check if the donation or loan is from a permissible source, and if they can accept it or not.^[5]

The Electoral Commission adds that permissible sources in Great Britain include:

• individuals registered on a UK electoral register, including overseas electors and those leaving bequests
• most UK-registered companies
• Great Britain-registered political parties
• UK-registered trade unions, building societies, friendly societies, and limited liability partnerships (LLPs) that carry on business in the UK
• UK-based unincorporated associations that carry on business or other activities in the UK
• some types of trust and certain public funds

Permissible sources in Northern Ireland include the sources above, plus Irish citizens (including bequests), most Irish-registered companies, and Irish-registered political parties, trade unions, building societies, friendly societies, and LLPs that carry on business in the island of Ireland. They also include Irish-based unincorporated associations that carry on business or other activities in Ireland.

In practice this means that while foreign political donations are formally prohibited in Great Britain because foreign nationals and companies are not permissible sources, foreign money may enter UK politics via other means. This includes via UK-registered companies owned or controlled by a foreign national, or via foreign donations to UK-based unincorporated associations that then make donations to political parties.^[6]

The existing requirements around donations extend to both monetary and non-monetary donations (also known as donations in kind, for example providing office space).^[7] This includes the donation of cryptocurrency assets.^[8]

The Electoral Commission explains that when a political party receives a donation or loan, they have to:^[9]

• record information about the donation or loan, such as the amount and who it was from
• check the source of the donation or loan, and decide if it comes from a permissible source
• decide whether to keep or return the donation or loan, depending on its source
• report the donation or loan, if it is over the reportable amount or if the party returned it

The commission adds that political parties must report donations and loans if these are above or aggregate to over:

• £11,180 to the central party (or over £2,230 if the donor or lender gives further during the calendar year)
• £2,230 to accounting units (sections of a party whose finances are not managed directly by the party’s headquarters)

Parties must also report smaller donations from a single donor which exceed the reporting threshold when taken together and donations which ought to have been reported earlier.^[10]

The commission publishes details of reportable donations and loans received by political parties on a quarterly basis via its ‘Political finance online’ portal.

2. Government plans for reform

2.1 Manifesto commitment and subsequent strategy

The Labour Party’s manifesto for the 2024 general election included a commitment to “protect democracy by strengthening the rules around donations to political parties”.^[11]

The government subsequently published a strategy entitled ‘Restoring trust in our democracy: Our strategy for modern and secure elections’ in July 2025.^[12] This included a commitment to bring forward a bill in the current parliament to implement the ambitions included in the strategy.^[13]

Regarding changes to the legal framework for political donations specifically, the government said it wanted to introduce:^[14]

• greater due diligence checks on significant donations under a new ‘know-your-donor’ scheme
• tighter controls on donations from companies to ensure they have a legitimate connection to the UK
• stronger checks and transparency thresholds for unincorporated associations
• requirements for donors to declare connected sources of their funding

The strategy added that these changes would “apply to all types of donations via any financial transaction, including cryptocurrency”.

In response to an urgent question in the House of Commons on the strategy at the time of its publication, Rushanara Ali, then a parliamentary under secretary of state at the Ministry of Housing, Communities and Local Government, said the government intended to “give the Electoral Commission the power to administer a hefty fine, of up to a maximum of £500,000, to deter bad behaviour”.^[15]

The Electoral Commission has said the proposed reforms “have the potential to improve the strength of donation controls and help ensure voters can have confidence in the political finance system”.^[16]

2.2 Independent review into countering foreign financial influence and interference in UK politics

In December 2025 the government announced an independent review into countering foreign financial influence and interference in UK politics.^[17] The review followed the sentencing of Nathan Gill, a former MEP, for accepting bribes linked to the Russian state while he held elected office.

Secretary of State for Housing, Communities and Local Government Steve Reed said the review would be led by Philip Rycroft, a former permanent secretary. He added the review would conclude by the end of March 2026, and that its findings would “inform the elections and democracy bill that we have pledged to bring forward”.^[18]

The review’s terms of reference are as follows:

• examine the effectiveness of political finance laws and current checks and balances within the UK’s political regulation in identifying and mitigating foreign interference and bribery
• consider whether political finance laws could be strengthened in light of recent case studies on covert funding and foreign interference, including specific consideration of strengthening criminal enforcement measures
• specifically consider safeguards against illicit funding streams including the use of difficult-to-trace assets such as crypto-currencies, cash and third parties using foreign funding for political campaigns and advertising
• review the rules governing the constitution and regulation of political parties, and the Electoral Commission’s enforcement powers^[19]

The government has since reiterated that the “purpose of the review is to provide an in-depth assessment of the current financial rules and safeguards that regulate political parties and political finance and make recommendations”.^[20] It has also said:

Given the review’s independence, we cannot pre-empt specifics of the ground it will cover, nor the recommendations it will make. It is right that the review is independent of government and independent of any political party.^[21]

3. Read more

• House of Commons Library, ‘Political financing: Donations, loans and state funding’ and ‘What are the effects of political financing?’, both 17 December 2025
• House of Commons Library, ‘Cryptocurrency donations in UK politics’, 18 December 2025
• House of Commons Library, ‘Foreign political donations in the UK’, 9 January 2026
• House of Commons Library, ‘What ‘know-your-donor’ requirements do political parties have to conduct?’, 15 January 2026
• House of Commons Library, ‘What is an unincorporated association?’, 27 January 2026

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