Nigel Farage has told the BBC he discussed the “potential liabilities” of returning to politics before the 2024 general election.

It comes after The Sunday Times, external reported Farage had negotiated a deal in March and April 2024 with then-Reform leader Richard Tice to return to lead the party.

Farage confirmed he spoke with Tice in spring 2024 to scope out what would happen to Reform’s finances if he returned but said it “wasn’t a deal, it wasn’t an agreement”, adding that talks came “quite some time after” he received a £5m gift from a billionaire donor.

Labour said Farage’s remarks had “blown a gaping hole” in his argument for not declaring the gift after becoming an MP in July 2024.

Farage has repeatedly argued the £5m from British cryptocurrency investor Christopher Harborne was an “unconditional gift”, was intended for his personal security, “wasn’t political in any sense at all” and he was not an MP when he received it.

Reform’s opponents have said he should have declared it in the MPs’ register of interests when he was elected to Parliament.

The Parliamentary Standards Commissioner was investigating whether Farage broke the rules, but the process was suspended when he stood down as Clacton MP last month to force a by-election.

Farage said he took this decision as the “people of Clacton should be the judges of my actions”. The investigation will be resumed if Farage wins the by-election, which is taking place on 13 August.

Farage left frontline politics in 2021 and embarked on a broadcasting career.

In May 2024, Farage was serving as Reform’s honorary president but announced he would not be standing as a candidate in the general election in July of that year.

He reversed this position at the beginning of June and took over the leadership of the party.

Appearing at a press conference on Monday, Farage was asked if he had negotiated a deal on what would happen to Reform’s finances if he came back as leader – in light of the report in The Sunday Times.

He replied: “I had no intention of returning to politics or as leader of Reform, but in the spring of that year I did talk to Richard Tice about what the liabilities would be if I was to come back to that position.

“And you’d be a bit of a mug, wouldn’t you, to walk into a job and not find out what the potential liabilities were, and they were substantial.

“But without Richard, the party wouldn’t have even survived, so that was useful for me to know. But it wasn’t a deal, it wasn’t an agreement, it was subject to if I came back.”

He added: “If you want clarification on this, that came quite some time after the gift, which is perhaps the important point.”

Bridget Phillipson, chair of the Labour Party, said: “Nigel Farage has blown a gaping hole in his excuse for why his secret £5m ‘gift’ from a crypto billionaire did not need to be declared.”

The Commons code of conduct states that new MPs “must register all their current financial interests, and any registrable benefits (other than earnings) received in the 12 months before their election within one month of their election”.

The rules say “purely personal gifts or benefits” from family or commercial loans would not normally have to be registered.

The rules also say “both the possible motive of the giver and the use to which the gift is to be put should be considered”, adding “if there is any doubt, the benefit should be registered”.

A full list of the candidates standing in the Clacton by-election can be found here.

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