What are the political donation rules in the UK?

This week the Observer spoke to our director of research, Jess Garland, about the inadequate rules surrounding party funding in Britain.  As Jess told them: “the concern is that if the current rules aren’t updated, we will end up with a politics for sale to the highest bidders”. 

The current flimsy financing rules allow ‘dark money’ to flow into our politics. Dark money is money from undisclosed sources, meaning that the public is being left clueless about who might be trading funds for influence. 

So, what are the current rules for political donations in the UK, and is it time to tighten them? 

What counts as a political donation? And who can donate? 

The rules on political donations to parties registered in Great Britain are set out in the Political Parties, Elections and Referendums Act 2000 (PPERA).  

The rules differ slightly for parties that are registered in Northern Ireland. 

Under these rules, a donation is defined as ‘goods or services given to a party without charge or on non-commercial terms, with a value of over £500’.  Donations under this amount aren’t covered by the rules. 

Under the current rules, only donations from certain sources are permissible. Permissible sources include: individuals registered on a UK electoral register, UK-registered unincorporated associations, and UK-registered companies which are incorporated in the UK and carry on business in the UK.   

When do donations need to be reported? 

Only donations or loans over £11,180 need to be reported – a figure that quietly rose from £7,500 in 2023. 

However, a pretty major loophole exists in the reporting rules. Individuals that give money to unincorporated associations – a particular type of small, non-profit organisation – need not be on the electoral register. These bodies can then make a political donation. And for unincorporated associations themselves, if they donate under £37,270 year (a figure raised from £25,000 in 2024), there’s no need to register with the Electoral Commission at all.  

But the finances get murkier still: after hitting the threshold, only gifts received by these UAs of £7,500 or more need to be reported – and only donations of £500 count toward that threshold. It’s a worryingly secretive system. 

The loopholes don’t stop at unincorporated associations. Transparency International has reported that, since 2001, £13 million in donations has come from donors either alleged or proven to be intermediaries for foreign funds, or hidden sources. 

Is it time to change the rules? 

 It’s already patently clear that the true origin of millions of pounds of donations is being easily obscured because of the inadequate rules. At a time when public trust in politics is so low, there is simply no space for murky financial dealings.  

Ultimately, political donations can deliver the donor political influence. When every donation raises the question of what the donor expects in return, it’s doubly concerning for our democracy when the identity of the donor isn’t even clear. As the electorate, we should know who holds sway over our representatives. 

Worryingly, it’s not just individual donors but also foreign governments that are utilising loopholes to buy influence over our democracy. Alarm bells should be ringing. 

We urgently need a change in the rules.  

What’s the solution? 

There are a number of ways that party funding rules can, and should, be reformed.  

The government need to introduce caps on donations. This would reduce the overall flow of money into politics, helping to eradicate the problematic culture of big donors. The balance would then be shifted in favour of voters. 

The threshold for reporting donations to the Electoral commission must be reduced. It’s key to ensuring greater transparency. 

For companies, only profits generated in the UK should be allowed to be donated, in order to ensure foreign billionaires can’t pour in money from abroad. 

And it’s time for parties to be required to conduct full checks on the true source of their donations. There’s no excuse for dirty money in Britain. Unincorporated associations must also conduct checks on donations. 

It shouldn’t end there, but these recommendations will serve as a welcome step to reforming money in our politics.