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UK to expand city mayors' control of income tax and business rates

The share of taxes mayors receive is not yet set, but the plans call for business rates retention starting April 2027 and income tax revenue sharing from April 2028.

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The UK government will give city-region mayors in England a share of income tax revenue for the first time, in a devolution push led by Prime Minister Andy Burnham, aimed at shifting power away from Westminster toward local leaders, BBC Business reports.

Burnham will also allow mayors of English strategic authorities to keep some proceeds from business rates collected in their areas and expand their control over services including housing, transport, and skills, according to the report.

The government has not yet decided what portion of income tax and other revenues will be allocated to mayors, with more details expected when Chancellor John Healey delivers his first budget in the autumn, the outlet said.

Critics warned the plans may lack sufficient detail and could leave weaker-economy areas worse off, while Burnham argued the changes will ensure more taxes raised in communities stay there. BBC Business also notes the OECD estimate that only 5.8% of national taxes are collected locally in the UK, the lowest share among the G7, compared with 45.7% in the US and 20.4% in France, and that mayors currently rely largely on central government grants. The rollout is expected to begin with business rates retention from April 2027 and income tax sharing from April 2028.

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