Government confirms new fiscal devolution plans
The Government has confirmed that English mayoral strategic authorities will receive a 20% share of business rates revenues from April 2027, under reforms announced alongside the Budget on 28 October 2026. The Treasury has published a Fiscal Devolution Roadmap setting out plans to give local and regional leaders more control over funding and investment.
How the business rates changes will work
The Government says mayors will receive 20% of business rates revenues from April 2027, while local authorities’ retained share is intended to rise to at least 70% in the coming years. Ministers have committed to making business rates a fully locally retained tax by the end of the decade. This does not mean that each individual council will keep every pound raised in its area: the final framework will need to address how revenue is shared and redistributed between local and strategic authorities.
Why ministers are changing the system
Business rates are charged on most non-domestic properties, including shops, offices and industrial premises. The Treasury says retaining more revenue locally will give authorities greater certainty and an incentive to support commercial development. The amount available to any particular region will depend on the detailed funding rules and the size of its local business rates base.
Income tax assignment and visitor levy planned
From 2028, mayoral strategic authorities are expected to receive an assigned share of income tax receipts. That is a transfer of revenue, not a power for mayors to set income tax rates. The Government also intends to legislate so that mayors and other strategic authorities can introduce an Overnight Visitor Levy from 2028.
Borrowing and growth funding
The Budget also confirms plans for a £1.5 billion borrowing facility for mayoral strategic authorities, expected to be operational by 2028. Borrowing capacity is not the same as a grant. The Treasury has allocated £165 million in 2027–28 for Good Growth Funds in areas with a mayor and announced additional capacity-building support for strategic authorities.
Questions remain over distribution and accountability
The reforms could provide more flexibility for regional investment, but the financial outcome will depend on how revenue is allocated between councils and mayors, and on arrangements for places with weaker tax bases. The Treasury roadmap sets out plans for local accountability and fiscal sustainability. The detailed implementation arrangements will be important in determining the effects on individual areas.
What happens next
The first business rates changes are scheduled for April 2027, with income tax assignment and proposed visitor levy powers following from 2028. The Government aims for full local retention of business rates by the end of the decade. The announcement changes how tax revenue is allocated within government; it does not by itself announce a new business rates charge or a reduction in bills for businesses.