Labour is considering capping political donations by individuals and private companies amid reports Elon Musk will hand a $100m donation to Nigel Farage’s Reform UK.

The Tesla tycoon is said to be plotting the £79m donation, which would be by far the largest in British electoral history, via the British arm of his social media firm X.

According to The Sunday Times, leading businessmen and Conservative Party officials believe Musk could hand over the cash as a “f*** you Starmer payment” in his ongoing feud with the prime minister.

It would give Mr Farage’s insurgent Reform a significant financial advantage over Labour and the Conservatives and be enough to fund a near-endless barrage of attack ads against the government.

But the government is considering recommendations in an upcoming report by the Institute for Public Policy Research (IPPR) think tank that would cap individual and corporate political donations at £100,000 a year.

The Guardian reported that officials have asked for more details on the proposals, though work is at an early stage and any changes would unlikely be made until late in the parliament.

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The potential donation cap comes as Mr Musk and Mr Farage grow increasingly close, with the Reform leader describing the billionaire Trump ally as “my new friend” last week.