Funding for political parties and candidates in the UK is regulated mainly by the Political Parties, Elections and Referendums Act 2000 (PPERA), passed by the Labour government in 2000, which also established the Electoral Commission.

The Electoral Commission, somewhat analogous to India’s Election Commission, monitors how parties adhere to funding and spending rules, and requires parties to submit a quarterly report.

Unlike the now-scrapped Electoral Bond system in India, the UK’s law requires political parties to maintain and report the details of donors, including their names — and in the case of companies, addresses — and the amount they donated over a particular threshold in quarterly reports.

Beginning the first quarter (Q1) of 2024, this threshold has been set at £11,180 (roughly ₹11.66 lakh at current exchange rate). This means that all donations by an individual, a company or a trust that crosses that threshold in a calendar year must be reported to the Electoral Commission. Additional donations from the same entity over this limit will need to be reported again, if it adds up to more than £2,230.

Cash, property, sponsorship of an event or publication, subscription or affiliation payments and free or specially discounted use of an office space are counted as donations. The same conditions also extend to loans that a political party might accept.

“You must add together any permissible benefits that fall under the reporting threshold that you receive from the same source in the same calendar year. This means you must add together donations and loans from a source and report these when the total value of the benefits meets the relevant reporting threshold,” the Electoral Commission’s guidance for political parties says.

For individual privacy, the explanatory note in the reporting form RP-10 clarifies: “The addresses of individual donors will not be published on the register of donations. If the donor is an individual, please insert the address at which he is registered to vote… If the donor is an organisation, please give the organisation’s registered address.”

The UK law also lays down who is allowed to donate to political parties and what are permissible as donations. The Electoral Commission identifies “permissible sources” as an individual registered as voter, a UK-registered company, trade union or building society, a UK-registered limited liability partnership (LLP) that carries on business in the country and a UK-based “unincorporated association”.

The PPERA law also lays down specific limits for what to do if a political party has received donations from an “impermissible source” — it must, within 30 days, first determine if any donation is legal and, if not, first return it and then report it to the Commission.

Donations under £500 are not covered for reporting under the law, but the Electoral Commission adds that parties must make efforts to detect if they are receiving donations in small donations to avoid scrutiny that is applied to higher amounts.

“It is an offence to attempt to evade the controls on donations. For example, if a number of donations of £400 are made from the same source in similar circumstances in an attempt to evade the permissibility rules,” the Commission’s guidance says.

While these rules are among some of the most stringent in terms of identifying donors, there are still loopholes that are exploited. For instance, unincorporated associations – which do not have to adhere to auditing standards as formal incorporated organisations do – are believed to have been misused to route millions of pounds of political donations to parties. In the five years till June, 2023, according to a report by Politico, close to £14 million pounds were donated by such bodies – while these associations are identifiable, the actual people behind it are concealed.