Tories ask HMRC to probe Nigel Farage over £5m gift

Conservative chair Kevin Hollinrake has asked HMRC to investigate whether Nigel Farage should have paid tax on a £5m gift from crypto billionaire Christopher Harborne, questioning if it was disguised income linked to a return to politics rather than a genuine personal gift.

Key Takeaways

• The Conservatives have asked HMRC to examine whether Farage’s £5m payment from Harborne was taxable income, not a personal gift.
• Farage says the money was unconditional, “totally undeclarable,” and backed by a document stating nothing was expected in return.
• Party chair Kevin Hollinrake cites reporting that Farage sought £1m a year in compensation to run for office.
• Tax expert Dan Neidle has already queried whether the £5m should have incurred tax.
• Farage also faces a parliamentary standards inquiry over the Harborne gift and undeclared funding tied to George Cottrell.

Why are the Tories asking HMRC about Nigel Farage’s £5m gift?

According to The Guardian, Conservative Party chair Kevin Hollinrake has written to HMRC questioning the tax status of the £5m Farage received from Christopher Harborne.

Hollinrake asked whether the payment was truly a personal gift, or whether it was connected to Farage resuming the leadership of Reform UK and standing for election to parliament.

If it was linked to those roles, he argued, there would be a “serious question” as to whether it should be characterised as income rather than a gift.

He called on HMRC to examine whether the payment falls within the “disguised remuneration” regime or otherwise constitutes taxable earnings from an office, employment or political position.

Hollinrake said that if the money was intended as a reward, inducement or compensation connected with Farage’s roles within Reform UK, the tax treatment “may be materially different” from that of a genuine personal gift — and different from a normal political donation, which he noted it was not declared as.

How has Nigel Farage explained the £5m payment?

Farage has said the gift was purely personal and unconditional, with a document drawn up to say it was given with no expectation in return.

He has previously said the payment was to go towards his personal security costs, and a reward for campaigning for Brexit. He also said it was no one’s business what he did with the money and that he could “spend it on Ferraris” if he wanted.

On the Triggernometry podcast over the weekend, Farage said the £5m was “totally undeclarable in every single way.” He acknowledged that the parliamentary standards system could find against him, but claimed a top international lawyer advised him the sum did not need to be declared because it was unconditional.

Lawyers for Harborne have referred back to previous statements that he “expected nothing in return” and “did not envisage Mr Farage returning to politics.”

For readers tracking how large transfers, gifts and earnings can be treated differently for tax purposes, BlasterPost’s Wealth Hacks & Passive Income hub covers related money and income themes.

What reporting triggered the HMRC request?

The Guardian reported this month that three sources said Farage informed senior Reform UK figures he would require compensation of £1m per year to offset his loss of earnings if he were to run for office.

A Reform spokesperson said at the time that the Guardian’s report was “fake and wholly incorrect.” In light of that reporting, Hollinrake wrote to HMRC asking it to investigate.

Tax expert Dan Neidle has already raised questions around whether the £5m should have incurred tax after the Guardian’s reporting. Reform UK has been approached for comment on the Tory letter.

Parliamentary rules state that gifts and benefits in kind have to be declared for the 12 months before an MP enters parliament, but only if they are political — a distinction Farage leans on in defending non-declaration.

What else is under scrutiny for Farage and Reform UK?

Farage faces a standards inquiry over Harborne’s gift and other undeclared funding from the fraudster George Cottrell.

Al Jazeera reports that the undeclared £5m personal gift came on top of some £25m in funding Harborne gave directly to Reform UK, and that Farage resigned as MP for Clacton before campaigning to regain the seat in a byelection cast as him versus “the establishment.”

Major parties have refused to field candidates against him in that contest. Farage is fighting a byelection against more than 30 candidates, none from the main parties, which decided to boycott.

He could face a second byelection if the commissioner finds against him and the standards committee recommends a substantial sanction including suspension from the Commons, triggering a possible recall petition. The major parties have said they would stand against him in a second contest were it to occur.

Al Jazeera also notes continuing criminal and parliamentary investigations into donations, and public scrutiny of Farage’s ties to Harborne’s stablecoin Tether — claims of illicit use that the company disputes. Farage has repeatedly denied being unduly influenced by Harborne, insisting the £5m was a gift he is free to spend as he sees fit.

Political financing expert Sam Power told Al Jazeera that “Farage and Reform are in a significant amount of trouble,” arguing ethics scandals can move voters even when they rarely top the issue agenda. Whether HMRC opens a formal probe — and how it classifies the payment — will determine if one of Britain’s most high-profile political gifts becomes a taxable event.