Prime Minister Andy Burnham has announced that mayors of city regions in England will receive a share of income tax revenue for the first time. They will also be allowed to keep some of the business rates — a tax on shops, offices and other commercial properties — collected in their areas. The BBC reported the package on 25 July, following a Sunday Times preview the previous day (BBC; The Sunday Times.

The government has not yet decided the exact proportion of taxes to be passed on. More detail will follow when Chancellor John Healey delivers his first Budget in the autumn (BBC).

Mayors will also gain greater control over housing, transport and skills in their regions. Burnham said the move would "make good" on his pledge to "bring power home" to "every postcode in the country" (BBC.

The announcement builds on groundwork laid before Burnham entered Downing Street. The July 2024 King's Speech included an English Devolution Bill designed to give mayors and local leaders more say over economic decisions, including transport and jobs (Reuters. The previous government had already been exploring whether a share of national tax revenue could be distributed to city mayors (BBC. In March 2026, Chancellor Rachel Reeves said the UK would devolve more tax powers to regions, adding that handing mayors control of some tax revenues could amount to a major shift in Britain's financial system (Reuters.

Burnham's interest in giving regions control over tax revenue goes back further than his time as prime minister. When he was mayor of Greater Manchester, he pushed for greater control over tax revenue rather than relying on money handed down by central government (BBC. A House of Commons Library briefing published on 2 July noted that Burnham had previously said "I think exploring [devolving] aspects of income tax is possible" (House of Commons Library. In a June speech on devolution, Burnham said he would "oversee the biggest rebalancing of power our country has ever seen" if he became prime minister (BBC.

That speech framed what Reuters has described as Burnham's "Manchesterism" vision for the UK. Under this vision, he has vowed to stay within existing fiscal rules, including balancing day-to-day spending with revenues by 2029/30 (Reuters.

The scale of the shift becomes clearer when you look at how centralised the UK's tax system is. Only 5.8% of national taxes in the UK are collected at local level, the lowest share in the G7 group of major economies, according to OECD data cited by the BBC (BBC. Reuters has put the figure at roughly 6%, noting that Britain has expanded devolution in stages over three decades (Reuters.

It is worth noting that this announcement applies to England only. Scotland, Wales and Northern Ireland already have their own arrangements. Income tax is already partially devolved to the Scottish Parliament and, to a lesser extent, to the Senedd — the Welsh parliament. Stormont, Northern Ireland's assembly, operates under a different framework again.

The direction of travel has had local-government backing for some time. A Staffordshire County Council economic bulletin from November 2025 noted that English regional mayors were to be given tax powers (Staffordshire County Council. A December 2023 London Assembly report on devolution recommended handing the capital control over stamp duty, air passenger duty, vehicle excise duty, a share of income tax, VAT revenue and a tourism tax (London Assembly.

The broader context here is a structural one. At the moment, English city mayors depend on money given to them by central government, with limited ability to raise their own funds. The analogy is a household that receives a fixed allowance: you know what you are getting, but you cannot earn extra yourself. Shifting mayors onto a tax-share model would change the relationship between Whitehall and city regions in a way that is new for England, even if the idea is well established in Scotland, Wales and Northern Ireland. The key unanswered question is how large the share will be. If it is small, the change may matter more in principle than in practice. If it is large, mayors would gain real flexibility — but they would also take on the risk that tax receipts go up and down with the wider economy, something that does not happen when you receive a fixed grant.

There is also the question of the government's own spending rules. Burnham has pledged to balance day-to-day spending with revenues by 2029/30, which limits how much the overall pot of public money can grow. Devolving a share of income tax does not create new money; it moves it from one part of government to another. If mayors spend from their own tax share, the grant they currently receive from Whitehall would presumably be reduced. The net effect on their budgets will depend on the terms set in the autumn Budget, and on whether the Treasury reduces the grant to match the new tax revenue exactly or builds in a cushion during the transition.

For those working in city-region authorities, the practical implications are immediate. Medium-term financial planning, borrowing and programme design may all need to be revisited once the share is confirmed. Transport projects, in particular, have traditionally been planned around fixed grants. A revenue stream tied to income tax would bring a new kind of risk — that tax receipts can fall as well as rise — into long-term building programmes that have, until now, been protected from that.