20AUG

IFS: mayors to get 6% to 9% of income tax

2 min read

17:53UTC

The Institute for Fiscal Studies says assigning 6% to 9% of local income-tax revenue to England's mayors from April 2028 would hand them funding clarity and a risk they cannot manage.

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EconomicDeveloping

Key takeaway

The IFS warns mayoral income-tax assignment from 2028 would move revenue risk to authorities that cannot control it.

The Institute for Fiscal Studies (IFS), an independent economics research institute, responded on 6 August 2026 to government plans to assign between 6% and 9% of local income-tax revenue to England's mayors from April 2028⁠¹. The arrangement would replace the integrated settlements currently running in the North and the Midlands, under which central government hands a mayoral authority a single consolidated grant.

The Institute for Fiscal Studies sets one gain against one risk in the same response. Assignment gives an authority a longer view of its funding than annual grant settlements allow, which makes multi-year commitments possible. It also exposes that authority to swings in receipts driven by employment, wages and national tax policy, none of which a mayor sets⁠². Assignment is not devolution of the tax itself: rates and thresholds would stay in Westminster, while the yield would land locally.

For this desk the arrangement matters as a channel rather than as a policy. Local government distress has come through grant shortfalls and emergency support so far, with 36 councils granted £1.74bn of Exceptional Financial Support for 2026-27. Assigned income tax adds a second channel that moves with the economic cycle, and it arrives on a date nearly two years out, which is long enough that the size of the sums involved will be set by circumstances nobody can currently observe.

Deep Analysis

In plain English

Regional mayors in England, such as those covering Greater Manchester or the West Midlands, currently receive government funding through a fixed grant settlement. From April 2028, the government plans to replace some of that with a share, 6% to 9%, of the income tax collected in their area instead. That change means a mayor's funding would rise or fall with how much income tax people in the area actually pay, rather than being fixed in advance. The Institute for Fiscal Studies, a research body that analyses tax and spending policy, says this gives more long-term certainty but also more exposure to local ups and downs the mayor cannot control.

Deep Analysis

Root Causes

The IFS's own figures show why the volatility risk falls unevenly: income-tax revenue per person currently varies by more than 3.5 times between Greater London and the West Midlands.

A tax-share model ties each mayoral authority's funding to its own local income-tax base, so authorities in lower-revenue areas would see their funding move more with local economic conditions than authorities in higher-revenue areas, even under an identical percentage share.

What could happen next?

Consequence
Authorities in lower income-tax-base areas would see their mayoral funding move more with local economic conditions than authorities in higher-revenue areas, under the same percentage share.

Source Landscape

This story draws on neutral-leaning sources

Consensus view: The Institute for Fiscal Studies' own response says assigning 6% to 9% of local income-tax revenue to mayors from April 2028 would give authorities longer-term funding clarity and growth incentives, replacing the current North and Midlands integrated settlements.

Counter-view: The same IFS response says this exposes authorities to revenue volatility outside their control, at a time when the Ministry of Housing, Communities and Local Government has already agreed Exceptional Financial Support in principle for 36 English councils, worth roughly £1.74bn, up from 18 two years earlier, with six of the 36 already under statutory intervention.

Key tension: Whether the funding-clarity benefit of a predictable tax share outweighs its volatility risk for authorities that are already among the group needing emergency support under the current grant system.

Sources:Institute for Fiscal Studies

Mentions:Institute for Fiscal Studies →Exceptional Financial Support →Westminster →England →Greater Manchester →

First Reported In

Update #2 · Three household registers, three answers

Institute for Fiscal Studies· 20 Aug 2026

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