Income tax share plan would give English regional mayors a cut of local tax revenue, with more details set for the autumn budget.
Income tax share plan is at the center of a new devolution push from Prime Minister Andy Burnham, who wants every mayor of a city region in England to receive a slice of income tax revenue for the first time. The move would mark a significant shift of power away from Westminster and toward local leaders, with the government promising to give mayors more control over the money raised in their areas.
Burnham also plans to let mayors of English strategic authorities keep some business rates collected locally, while expanding their role over housing, transport and skills. The reforms are intended to replace dependence on central government grants with a system that ties funding more closely to local economic performance. Officials say the exact share of income tax and business rates has not yet been settled, and a full policy paper is due alongside Chancellor John Healey’s first budget in the autumn.
The income tax share plan would not change tax rates themselves. The basic rate would stay at 20% on income from £12,571 to £50,270. Treasury sources say some metro mayors could ultimately have more to spend if their economies grow and their tax bases widen. The share assigned to each area may differ, and officials are still working through how the model will function in practice.
Critics immediately warned that the proposal leaves too many questions unanswered. Conservative shadow chancellor Sir Mel Stride said the announcement was short on detail and argued that any new funding would have to come from somewhere, whether through higher borrowing, cuts to central grants, or another tax move elsewhere. He also said weaker local economies could lose out, which he cast as the opposite of what Burnham says he wants to achieve.
“Income tax share plan would give English regional mayors a cut of local tax revenue, with more details set for the autumn budget.”
Reform UK home affairs spokesman Zia Yusuf used the announcement to press for a different kind of devolution, calling for local areas to be given full power over whether the Home Office houses illegal migrants in their communities. His comments showed how Burnham’s wider decentralisation agenda is already drawing pressure from across the political spectrum, even as the government tries to define what powers should remain in Whitehall and what should move closer to voters.
Burnham has made devolution a core theme of his government, saying local leaders are better placed to drive economic growth. In a June speech, he said he would oversee the biggest rebalancing of power the country had ever seen. The plan now being built in Manchester under the No 10 North project is meant to put that promise into action, with ministers expected to explain why any power should stay at the center under a new local-first principle.
The government is also designing an equalisation system so places that collect less tax still get financial support. That detail matters because England’s regional economy is not evenly spread, and any shift toward local revenue will have to avoid leaving poorer areas behind. By April 2027, English metro mayors are expected to start retaining some business rates, with a share of income tax following in April 2028. That is the key test for the income tax share plan: whether it truly boosts local accountability without widening the gap between stronger and weaker regions.
Reaction among metro mayors has been mixed. West Yorkshire Labour mayor Tracy Brabin said a share of income tax would let people see and feel the return from their work, while helping fund better public transport and stronger skills and employment support. Tees Valley Conservative mayor Ben Houchen said he would prefer tax cuts, but added that if he received a local income tax share, he would use it to create a rebate scheme. For American readers, the broader lesson is straightforward: when power and tax revenue move closer to local communities, the fight over who benefits, and who gets left out, quickly becomes the real story.
Frequently asked questions
What is the new devolution plan actually proposing for mayors?
It would give every English city-region mayor a share of income tax revenue and let mayors of strategic authorities keep some business rates collected locally. The plan also expands mayoral powers over housing, transport, and skills.
Will the income tax rate change under this plan?
No. The article says the income tax share plan would not change tax rates themselves, and the basic rate would stay at 20% on income from £12,571 to £50,270.
When would these changes take effect?
The policy paper is due with Chancellor John Healey’s first budget in the autumn. English metro mayors are expected to start retaining some business rates by April 2027, with a share of income tax following in April 2028.
How are officials planning to protect poorer areas?
The government is designing an equalisation system so places that collect less tax still get financial support. The article says this is important to avoid leaving weaker regional economies behind.
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