The Rycroft Review proposes welcome reforms, including caps on overseas donors, profit-based limits on corporate donations, and a ban on crypto donations. However, CenTax analysis identifies significant enforcement gaps. Dr Sebastian Gazmuri-Barker reflects on what the Review gets right, where gaps remain, and how the lack of a donor registration system makes several recommendations difficult to implement in practice.
In March 2026, CenTax published research showing that nearly one in ten pounds donated by companies seems to come indirectly from individuals who could not donate directly and that around a quarter of corporate donors fail to meet the principle of transparency. We recommended either an outright ban on corporate donations or, at minimum, six reforms to protect our political system from the risks of donors’ influence and foreign interference in the presence of corporate donations. These include a donor registration system and direct reporting to the Electoral Commission of the ultimate controllers of corporate donors.
The Rycroft Review, published on 25 March 2026, makes 17 recommendations to reduce the risk of foreign interference in UK politics. Here we focus on the first five, which propose substantive reforms to the rules on political donations and which should inform amendments to the Representation of the People Bill 2026 (the Bill).
Overall assessment
Assessing these recommendations against the findings in our report, we conclude that the Review strengthens the reforms already proposed in the Bill and, if adopted, would move them further in the right direction. We welcome all five recommendations on political donations. However, the Review is largely silent on how some of these would be enforced, despite some of the recommendations raising substantial challenges for enforcement. We have reservations about the feasibility of implementing these recommendations unless introduced alongside some of the practical measures we recommended. It is essential that further consideration is given to the obstacles for effective implementation before the recommendations are enacted in the Bill.
What the Rycroft Review gets right
Recommendation 1 proposes an annual cap on political donations from British citizens living abroad (in the range of £100,000 to £300,000). This addresses a risk the Bill had not previously considered: the possibility of foreign money entering UK politics through overseas British nationals. In so far as this is addressing a risk previously ignored in the Bill, we support the proposal. However, we have concerns about how this could be enforced, as detailed below.
Recommendation 2 proposes replacing the Bill’s revenue-based limit on corporate donations with a profit-based limit, applied to a donor’s cumulative political donations in a year (aggregated across all political parties). We agree this would be an improvement. A company could very easily generate significant UK turnover while having no genuine UK operations and this proposal has previously been made by several groups, including the Electoral Commission and Spotlight on Corruption. However, any measure that restricts corporate donations to either revenue or profits would face serious enforcement challenges as we explain below.
Recommendation 3 proposes banning cryptocurrency donations, on the basis that the anonymity of cryptoassets creates a route for foreign money to enter the political system. This addresses a transparency risk the Bill had previously ignored, so we fully support this.
Recommendation 4 proposes equalising the treatment of non-party and candidate campaign spending with that of political parties in respect of donor permissibility and reporting rules. We fully agree with this recommendation. Any person or entity engaged in political campaigning should face the same rules. Failing to extend these requirements risks displacing targeted activity onto unregulated actors and undermines the other reforms in the Bill.
Recommendation 5 proposes strengthening the “know your donor” provision to meet anti-money laundering standards. We support the objective but have reservations about where the compliance burden falls. We return to this below.
Where the Review falls short
Cap on donations from overseas British individuals
The Review is silent on how this would be enforced. This is problematic as implementing the cap without addressing these challenges would undermine its effectiveness. We have identified two major loopholes that need to be closed for the cap to work.
- Using entities to circumvent the cap: Any cap that limits donations of individuals need to be mirrored by a cap on donations by entities controlled by these individuals (both incorporated and unincorporated entities). Failure to do so would provide an easily exploitable loophole for those overseas individuals targeted by the cap.
- Splitting donations into multiple entities: The second challenge arises from imposing a cap on entities (as suggested above). As soon entities controlled by an overseas individual are subject to an annual cap on their donations, the overseas individual will have the incentive to split their larger donation into multiple smaller donations channelled through multiple entities. To prevent this, all the donations from entities controlled by the same overseas individual would need to be aggregated for the purpose of the cap.
Both requirements demand that parties be able to link individuals to the entities they control and track cumulative donations within a year. This is not possible without the donor registration system we recommend in our report.
Profit-based limit on corporate donations
The Review acknowledges the risk that companies may artificially inflate profits to circumvent the cap but suggests parties should simply “remain vigilant.” This greatly understates the problem. Implementing the limit effectively requires applying transfer-pricing-style scrutiny to donor companies to distinguish genuine profits from inflated figures. Managing this for tax purposes is hugely resource intensive for HMRC given the level of complexity. As an illustration of this complexity, HMRC’s International Manual has around 500 pages dealing with transfer pricing guidance. The Electoral Commission currently lacks the resources and expertise to do this, and it is unrealistic to expect political parties to do it either. This is one of the reasons we concluded there is a strong case for banning corporate donations altogether.
The Review also recommends that corporate donations should be aggregated across political parties for the purpose of the profit-based limit (to avoid companies donating multiple times their profit-based limit by donating to different parties/candidate). Implementing this also demands cross-party data sharing that the current regulatory framework does not support. Again, a donor registration system is essential to make this work in practice.
Absence of recommendations to improve ‘significant control test’
The Review does not recommend any improvements to the ‘significant control test’ in the Bill. This test is intended as the main legislative response to the risk that foreign individuals can currently make political donations by channelling the donations through UK companies, but it has several weaknesses. Not tackling these is a significant shortcoming of the Review.
The Bill’s ‘significant control test’ restricts which UK companies are ‘permissible donors’. Broadly, permissible corporate donors are those that have a person with significant control (PSC) who is registered in a UK electoral register. Our research identifies two problems with this approach.
First, it relies on the PSC register which was never intended for this purpose, creating three key problems. To start, our empirical research shows the register fails to trace around a quarter of donor companies to an individual controlling them. This is not surprising as the objective tests to be considered a PSC (i.e. holds more than 25% of shares or voting rights in the company), which are the most easily enforced, have high thresholds that make them easily avoidable. In addition, the PSC register only captures those controlling the company, but this may not be the same individual that controls a donation by the company. Finally, the PSC register fails to bring any transparency to unincorporate entities making donations (e.g. unincorporated associations and general partnerships).
Second, even if we ignore the inadequacy of the PSC register, the ‘significant control test’ is self-defeating because it effectively exempts from any ownership control those companies that do not report a PSC, as the Bill also defines as ‘permissible donor’ a company if “there is no person who is a registrable person in relation to the company”. Given the aforementioned problems of compliance and the generous thresholds for the objective tests for PSCs, this creates a very easily exploitable loophole.
AML-like “know your donor” checks
We have previously argued that compliance should move upstream, with the Electoral Commission conducting the main permissibility checks rather than individual parties. The Review’s own findings show that political parties do not seem to have the capacity to comply with further regulation in this area. For example, the Review notes that much party work is carried out by volunteers in regional and local branches. It also finds that parties report conducting permissibility checks primarily on donations above the £11,180 reporting threshold, even though permissibility checks and aggregation requirements apply to any donation above £500.
These findings suggest that some political parties do not fully understand, or lack the capacity to properly comply with, their existing regulatory obligations, let alone the capacity to take on the more demanding due diligence rules the Review proposes. The solution is to move the primary compliance obligation upstream to the Electoral Commission and to give parties a donor registration system that makes aggregation and permissibility checking straightforward. This would lower overall compliance costs while simultaneously lowering the risk of non-compliance.
8 April 2026
About the author
Sebastian Gazmuri-Barker holds an LLB in Law from Pontificia Universidad Católica and an LLM in Law from LSE. He has recently completed his PhD in tax law and policy at LSE Law School, with a focus on tax systems in developing countries. He previously worked in tax advisory at EY (UK), and in corporate M&A at Carey y Cia (Chile). His research at CenTax currently focuses on the design of tax policies affecting top earners and the wealthy.
