Company donations in UK politics

Companies can donate to political parties in the UK as long as they are:

• registered as a company with Companies House
• incorporated in the UK, and
• carrying on business in the UK

However, it has been a longstanding concern that the lack of further restrictions creates a loophole through which foreign money can be donated to UK politics. For example, a company can donate money that it has received from any source, including investment or trading in other countries and it does not have to have generated this money in the UK. The Representation of the People Bill 2024-2026 includes reforms to address these issues.

How prevalent are company donations?

Electoral Commission records show that companies donated £242 million to political parties between 2001 and Q4 2025. This was 16.9% of all donations received during this period. Individuals accounted for the biggest share of donations at 42.6% (£611 million), but the figure for companies was similar to that of trade unions, which is 16.4%.

However, the ‘true’ level of company donations as a percentage of party income is likely a little lower than 16.8% as the calculation does not include membership fees. In the 2024 accounting returns these ranged from 20% of total party income (for the Labour Party, around £18 million) to 40% for Reform UK (around £4 million).

These figures represent all company donations, not necessarily those suspected of having been a proxy for foreign donations. In 2025 the UK branch of the anti-corruption charity Transparency International reported that they found £10.9 million of donations since 2001 (PDF) where the source of funding was unclear.

What concerns have been raised around company donations?

In its 2021 review, Regulating Election Finance, the Committee on Standards in Public Life considered the current rules surrounding company donations. It said that it “heard widespread concern about the risk that the current rules on donations from companies provide a potential route for foreign money into UK elections”.

While noting that it had “no principled objections” to donations being given by companies, the committee said the current regulations were “insufficient to guard against foreign interference in UK elections” and that corporations “should not be able to donate more money than they generate in profits”.

The committee ultimately recommended that the Political Parties, Elections and Referendums Act 2000 “should be amended to provide that company donations should not exceed net profits after tax generated in the UK within the preceding two years”.

In its 2025 paper, Restoring trust in our democracy: Our strategy for modern and secure elections, the Labour government expressed concern that what is meant by “carrying on business” is a low bar for permissibility. They argued that a new company – a so-called “shell company” – “could be registered today, owned by anyone and funded from anywhere and, without even a single day of trade, it could still meet this test”. They therefore said they would:

• bring forward measures in the Representation of the People Bill to ensure that shell companies would not be permitted to make donations in the UK; by
• requiring companies to make sufficient UK (or Ireland) generated income in order to donate; and
• work with stakeholders to “develop a ‘UK-connection’ test” to be introduced in coming legislation.

What reforms are in the Representation of the People Bill?

Clause 60 of the Representation of the People Bill introduces new eligibility rules on donations from companies and LLPs (limited liability partnerships). These are aimed at ensuring they have sufficient revenue and a qualifying connection to the UK or Ireland.

The bill implements a ‘significant control test’, which would mean that a company can only donate to UK political parties if the people with significant control of it (or that control more than half of it) are registered to vote in the UK or are British citizens living in the UK.

The new test is related to provisions in part 21A of the Companies Act 2006 which covers people with significant control of a company. To meet the significant control test a company must be one to which part 21A applies, and it must meet one of the four conditions set out clause 60 of the bill (which relate to different kinds of company ownership structures).

There are similar clauses which relate to LLPs, but which account for the slightly different legal structures they have as compared with companies.

The Representation of the People Bill would limit single donations from companies and LLPs based on their revenue. It would require that at the time of the donation there is sufficient revenue to cover it. This, according to a new Section 54H (to be inserted into the Political Parties, Elections and Referendums Act 2000), will cover turnover in the financial year and any other amounts (not included as turnover) which tend to be “recognised as revenue for the purposes of a profit and loss account”.

When introducing the Representation of the People Bill at second reading, the Secretary of State for Housing, Communities and Local Government justified these reforms saying that:

…illicit finance can damage people’s trust in politics, and maintaining the confidence of the electorate is imperative. That is why we are requiring stronger checks on significant donations, requiring more transparency from those making donations and ensuring that only companies with a legitimate connection to the UK can donate to those involved in UK politics.

Concerns over a revenue limit rather than profit limit

However, in this debate MPs such as Matt Western (Labour), Valerie Vaz (Labour), Lisa Smart (Liberal Democrat) and Helen Maguire (Liberal Democrat) expressed a preference for the Committee on Standards in Public Life’s profit test, as opposed to revenue, as a more effective safeguard against foreign money.

In a media briefing on the Representation of the People Bill, published on 12 February 2026, the Electoral Commission warned that “provisions would not reduce the risk of foreign money entering British politics through companies” and pointed out that companies could donate an equal amount to a party and each of its MPs, councillors and candidates:

There would be a limit on donations from companies, based on their revenue, that applies separately to each recipient. This means a company could donate an amount equal to their revenue to a party and then donate the same amount to each of the party’s MPs, councillors and candidates. This would allow companies to make legitimate donations many times their revenue, with no guarantee of the source of these funds.

The commission has said that the revenue limit must apply to the total value of all a company’s political donations in a calendar year, regardless of the number of recipients. It also suggested that donations should be limited by tying them to tax-paid, UK-generated profits. The Electoral Commission chair, Vijay Rangarajan, repeated this when giving evidence to the Public Bill Committee on 18 March 2026.

Government response

When asked why the government chose revenue over profit as their test during the Public Bill Committee Samantha Dixon, Parliamentary Under-Secretary of State, said the government did not want to exclude companies that were not making a profit in a particular year, for example, because of investment decisions:

The view of the Government is that companies that pass all of the other tests and want to donate to a political party may on occasion be in a position where they are not making profit. For example, if they are taking investment decisions across a particular year, which mean that they are in a non-profit situation but their revenue is still working, they should not be excluded from donating to the political system. That is why the Government’s view is that the test should be revenue, as well as the other tests in place, which we feel are very robust…

The minister also suggested they would take on board the findings of the Rycroft Review, which is due to report in late March 2026, saying that “it may be that Philip Rycroft comes forward with measures around this, which we will listen to as well as the evidence that we have heard today”.

The Joint Committee on the National Security Strategy (JCNSS), in a report released on 18 March 2026, aligned with the government view suggesting that “commercial realities might help explain why the Government decided revenue would be a more viable metric than profit”. The JCNSS did, however, recommend that the government amend “Part 4 of the Representation of the People Bill to specify that limits on corporate donations apply to the total amount per company, rather than per recipient”.

The Rycroft review was published on 25 March 2026. Rycroft echoed concerns around the revenue-based limit and expressed a preference for donations to be tied to profit:

The distinction is significant: companies may be pre-profit or make little profit but generate significant revenues. A test on profit would therefore tighten the potential pool of corporate donors by ensuring that donations are only made from profits they have made and paid tax on in the UK.

Rycroft also aligned with Electoral Commission concerns and said that the Representation of the People Bill allows “corporate donors to donate up to their revenue multiple times in any given year”. He suggested instead that:

...the limits on donations from corporate entities should apply cumulatively, however many regulated groups are the beneficiaries. In other words, no corporate donor should be able to donate more than their post-tax profits, averaged over the preceding two years, into UK politics in any given year.

How do other countries regulate company donations?

In their handbook on political party financing, the Sweden-based civil society organisation the International Institute for Democracy and Electoral Assistance (International IDEA) outlined that donations from corporations may be banned “to limit the influence on financing from vested interests”.

The International IDEA political finance database shows that 47 countries across the world (26%) ban corporate donations to political parties. These countries include Brazil, Canada and Germany. That number jumps to 38%, according to the International IDEA database, if one accounts for a ban on corporations with government contracts to political parties, as opposed to blanket ban.

In their 2021 review, the Committee on Standards in Public Life recognised this debate. It said it noted that “Canada and France ban corporate donations, but that this is unusual for countries broadly analogous to the UK”. And, as such, it said it had “no principled objection to donations being received from companies”.

Declaration

Dr Sam Power is Parliamentary Academic Fellow at in the Parliament and Constitution Centre in the House of Commons Library. In his capacity as an independent academic, he acted as an expert advisor to the Committee on Standards in Public Life’s Regulating Election Finance review. He also given evidence to both the Joint Committee on the National Security Strategy and the Public Bill Committee for the Representation of the People Bill on matters related to political financing.