It is the biggest fine ever imposed by the commission, the BBC’s assistant political editor Norman Smith said.
The fine follows an investigation into alleged misreporting of expenses during the 2015 general election campaign.
It relates to allegations that the party used national money to fund local campaigns, said the BBC’s Norman Smith.
The investigation concluded that there were significant failures by the party to accurately report on how much it spent on campaigning at three by-elections in 2014 and at the 2015 UK general election.
- The Conservative Party’s 2015 UK Parliamentary general election spending return was missing payments worth at least £104,765
- Separately, payments worth up to £118,124 were either not reported to the commission or were incorrectly reported by the party
- The party did not include the required invoices or receipts for 81 payments to the value of £52,924
- The party failed to maintain records explaining the amounts it invoiced to candidates in three 2014 by-elections, for work on their campaigns
Sir John Holmes, chair of the Electoral Commission, said: “Our investigation uncovered numerous failures by a large, well-resourced and experienced party to ensure that accurate records of spending were maintained and that all of the party’s spending was reported correctly.
“The rules established by parliament for political parties and their finances are there to ensure transparency and accountability.
“Where the rules are not followed, it undermines voters’ confidence in our democratic processes, which is why political parties need to take their responsibilities under the legislation seriously.”
Sir John said it is the third investigation that the commission has concluded recently where the largest political parties have failed to report up to six figure sums following major elections.
It comes after 12 police forces asked the Crown Prosecution Service to consider charges over election expenses.