can Elon Musk become a major backer of Farage’s Reform UK?

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Nigel Farage has confirmed he is in talks with Elon Musk about the tech billionaire making a donation to his populist Reform UK party.

Loopholes in British electoral law mean such a donation could be unlimited in size and likely to be permitted if structured correctly.

Tom Gillie, a barrister with a specialism in UK electoral law, said: “Existing legislation has not been drafted with this Musk scenario in mind — I don’t think anyone had conceived of this particular scenario happening.”

How could Musk donate?

UK electoral law prohibits foreigners from donating directly to British parties. Musk, as an American, Canadian and South African citizen, would not be allowed to make a direct donation to Reform.

But crucially the rules allow companies to donate to political parties so long as they are registered and incorporated in the UK, and carry on business in Britain.

Musk controls businesses that tick those boxes, including the UK arm of social media company X, and his AI company xAI, which was incorporated in the UK this year.

Gillie said the company making the donation would have to declare the ultimate source of the money, but it would still be permissible.

Gavin Millar KC, another election law specialist, said: “It’s the most obvious example of how our current legislation is not fit for purpose, it’s utterly absurd. Parliament has to change this law.”

However, Millar added there is little case law on this question and the Electoral Commission might look to who the money actually originated from and also question whether the company is being instructed by an impermissible donor.

“It’s a fiction to say the company’s a donor in this case,” he said.

Are there any limits on the amount Musk could donate? 

There are no legal limits on the amount an individual or company can donate to a party in the UK. There are however limits on the amount a party can spend during an election period.

For a general election, each party can spend £54,010 for each constituency that they contest, meaning that if a party chose to contest all 632 seats in the UK (excluding Northern Ireland), they would be able to spend £34.1mn

Individual candidates are also allowed to spend more during the final few months of an election.

There are limits on how much parties can spend in the regulated period ahead of local elections, based on numbers of electors in each ward. These limits will kick in on March 25 next year ahead of the May 1 council polls in more than 30 local authorities. 

Local elections will be crucial for Farage as he is hoping Reform UK will sweep across swaths of the country and win hundreds of seats, as well as at least one mayoralty. 

There is no limit on spending outside of regulated election periods. The question therefore is whether there would be enough time outside regulated election periods for Reform UK to spend the sizeable donations it is hoping to receive.

What impact could Musk’s money have on UK politics? 

Compared with American politics, British politics has historically been quite cheap. The biggest donor in recent history was health tech entrepreneur Frank Hester who gave £20mn to the Conservative party between 2023 and the 2024 general election.

Musk, the world’s richest man, alone contributed nearly 10 times that amount — about $250mn — to Donald Trump’s successful US presidential campaign this year.

A major donation from overseas could be pivotal for Reform UK, which has struggled to transform itself from a protest party into a credible vehicle for power.

Labour and the Conservatives spent between £30mn and £60mn annually outside of elections in recent years, while Reform spent closer to £1mn.

Farage’s goal over the next few years is to build an effective ground campaign in regions where the party already has some support, including Leicester, Nottingham, Lincolnshire and Essex in England, as well across Wales.

The party aims to mobilise residents in those areas to stand as candidates in local and general elections, work as regional directors, distribute leaflets and gather data for the party.

“We can’t just do it in the air war . . . we’ve slightly maxed that out,” deputy leader of the party Richard Tice told the Financial Times last week. “The more we raise, the more impact we’ll have faster. Good people don’t come for free.”

The governing Labour party said in its manifesto it would “protect democracy by strengthening the rules around donations to political parties”, name-checking in particular concerns about foreign interference.

Downing Street on Wednesday said that “work is ongoing to reinforce the existing safeguards” around the integrity of UK elections. 

But Prime Minister Sir Keir Starmer’s spokesman said he “certainly wouldn’t describe” foreign nationals using British companies to donate to UK political parties as a “loophole”, signalling Labour is not looking to change the rules allowing such moves.

Vijay Rangarajan, chief executive of the Electoral Commission, said: “The system needs strengthening, and we have been calling for changes to the law since 2013, to protect the electoral system from foreign interference.”

Changes requested include limiting company donations to money made in the UK, which he said was being discussed with the government.