Andy Burnham's tax agenda and what it means for your money

What the government actually announced

On 31 July 2026 the government announced that regional mayors in England will receive a share of income tax revenues for the first time. The government described this as the biggest transfer of power from Westminster in a generation. Income tax rates will not change as a result of the reform.

The announcement followed the political upheaval that saw Sir Keir Starmer resign as Prime Minister on 22 June 2026, with Andy Burnham subsequently becoming Prime Minister and John Healey as Chancellor. The new government moved quickly to set out its devolution agenda.

The key element of the 31 July announcement is that mayors will begin retaining a greater share of locally generated business rates from spring 2027, and a greater share of locally generated income tax from April 2028. The government stressed that this does not mean a change in the rates of income tax that individuals pay. Instead, the reform is about how the revenue raised is distributed between central government and regional mayors.

Full detail on the shares and the mechanism is due at the autumn Budget 2026, which will be delivered by Chancellor John Healey. Until then, the precise percentages and how they will be calculated remain unknown.

The government framed the move as a significant shift in the balance of power, giving mayors more control over funding for local priorities. However, the practical impact on taxpayers will depend on the details that emerge in the autumn Budget.

What it does and does not mean for the income tax you pay

The government has explicitly stated that income tax rates will not change as a result of the reform. The change affects who receives the revenue, not the amount you pay.

For individual taxpayers, the immediate effect is nil. The rates of income tax, the personal allowance, and the thresholds remain as they are. The reform is a fiscal transfer between central government and mayoral authorities, not a change to the tax code.

However, the longer-term implications are less clear. If mayors gain a share of income tax revenues, they may have an incentive to see local economic growth increase, as that would boost their share of the tax take. But this does not mean they can set their own income tax rates. The government has not announced any power for mayors to vary income tax rates.

The reform also does not affect National Insurance, VAT, or other taxes. The announcement was specifically about income tax and business rates. For most households, the practical consequence is that the tax you pay on your salary or pension will be the same as before.

What may change is how the money is spent. If mayors receive a larger share of locally generated income tax, they will have more discretion over spending on local services. But this is a matter of public expenditure, not taxation.

The wider Burnham tax agenda: what is proposal and what is speculation

Prime Minister Andy Burnham has said he will keep to Labour's commitment not to raise income tax or employee National Insurance on working people, nor the main rate of VAT. He has not published a formal tax manifesto and has not ruled a wealth tax in or out.

Since becoming Prime Minister, Burnham has made a number of statements about tax policy. On 27 July 2026 he ruled out replacing council tax, saying it would not be happening. Council tax has not been revalued in England since it was introduced in 1991, and there has been speculation that the government might seek to reform it. Burnham's statement ends that speculation for now.

On income tax and National Insurance, Burnham has reiterated Labour's commitment not to raise these taxes on working people. He has also said he will not raise the main rate of VAT. These are commitments, but they are not a comprehensive tax plan.

Burnham has not published a formal tax manifesto. This means that many tax changes remain speculative. Changes to capital gains, property and wealth-related taxes have been widely discussed, but they have not been formally confirmed. The absence of a formal manifesto leaves room for speculation, but no concrete proposals have been put forward.

A wealth tax has not been confirmed. While some commentators have suggested that the government might introduce a wealth tax to raise revenue, no such policy has been announced. Burnham has not ruled it in or out, but the lack of confirmation means it remains a matter of speculation.

The wider tax agenda is therefore a mix of firm commitments and open questions. The commitments are limited to not raising income tax, employee National Insurance, or the main VAT rate. Everything else is either unconfirmed or speculative.

What to watch at the autumn Budget 2026

The autumn Budget 2026, delivered by Chancellor John Healey, will provide the full detail on the shares and mechanism for the income tax devolution. This is the key event for understanding the practical impact of the reform.

The Budget is expected to set out the exact percentages of income tax and business rates that will be retained by mayors, and how these will be calculated. This will determine how much revenue is transferred from central government to regional authorities.

For taxpayers, the Budget will clarify whether there are any changes to tax thresholds or allowances, although the government has said income tax rates will not change. It will also reveal whether any of the speculative tax changes, such as those to capital gains or property taxes, are actually proposed.

The Budget will also be an opportunity for the government to set out its broader fiscal plans. Given the commitments on income tax, National Insurance and VAT, any new revenue-raising measures would need to come from other areas. This could include changes to capital gains tax, inheritance tax, or other wealth-related taxes.

Observers will also look for any confirmation or denial of a wealth tax. Burnham has not ruled it in or out, and the Budget is the most likely forum for such an announcement. However, the absence of a formal manifesto means that nothing is certain.

For households, the key takeaway is that the autumn Budget will provide clarity on the devolution of income tax and on any other tax changes. Until then, the details remain unknown.

Frequently asked questions

Will Andy Burnham's plans raise the income tax I pay?

No. The government has stated that income tax rates will not change as a result of the reform. The change affects how revenue is distributed between central government and mayors, not the amount you pay.

What did the government announce for mayors on 31 July 2026?

On 31 July 2026 the government announced that regional mayors in England will receive a share of income tax revenues for the first time. The government described it as the biggest transfer of power from Westminster in a generation. Income tax rates will not change.

When do the changes start?

Mayors will begin retaining a greater share of locally generated business rates from spring 2027, and a greater share of locally generated income tax from April 2028. Full details are due at the autumn Budget 2026.

Is council tax being replaced?

No. On 27 July 2026 Prime Minister Andy Burnham ruled out replacing council tax, saying it would not be happening. Council tax has not been revalued in England since 1991.

Has a wealth tax been confirmed?

No. A wealth tax has not been confirmed. Burnham has not ruled it in or out, but no formal proposal has been made.