The rules around donations to political parties need strengthening to “protect the electoral system from foreign interference”, the head of the elections watchdog has said.

Vijay Rangarajan, chief executive of the Electoral Commission, told The Guardian that it is “crucial” that people have “trust in the financing” of the political system.

It comes amid reports that X owner Elon Musk has been preparing to make a large donation to Reform UK.

In an interview with the newspaper, Mr Rangarajan said: “It’s crucial that UK voters have trust in the financing of our political system, so they need to see how parties and campaigners are financed and how they spend that money at elections.”

He added: “We recommend three key changes: limit company donations to the money that they have made in the UK; legally require parties to conduct know-your-donor checks on donations to assess and manage their risks; and ensure those who donate to unincorporated associations are permissible donors.”

According to UK election rules, parties can accept donations from a number of sources including individuals on the UK electoral register or a UK-registered company.

Earlier this week, Reform UK leader Nigel Farage suggested talks were underway with Elon Musk about a potential donation to the party, saying that the two had discussed money and there will be “ongoing negotiations”.

Mr Farage described his hour-long meeting with Mr Musk at Donald Trump’s Mar-a-Lago resort on Monday as “great” and “historic”, saying he and party treasurer Nick Candy had “learned a great deal about the Trump ground game”.

“We only have one more chance left to save the West and we can do great things together,” he said.

Writing in The Telegraph after the meeting, Mr Farage said Mr Musk described Labour and the Conservatives as “the uniparty” and “left us in no doubt that he is right behind us”.

“Inevitably, following such intense media speculation, the issue of money was discussed, and there will be ongoing negotiations on that score,” the Reform UK leader added.