One of the biggest donors to the UK Independence Party is threatening to walk away and plough his money into transforming the Leave.EU referendum campaign into a mass political movement.

Arron Banks, the insurance millionaire who has tipped £1.3million into Ukip in the past 18 months, is due to discuss the party’s financial position with donors in the next few days.

One source said Ukip – which is a private company – said the party would be technically insolvent if its loans were to be withdrawn. Its interim leader Nigel Farage said that could not happen.

The party is in turmoil after the party’s leader Diane James stood down as leader, and then the favourite to succeed her – Steven Woolfe – quit the party after an “altercation” with Mike Hookem, a fellow MEP.