London could see a public spending boost of £240m next year after mayor Sadiq Khan agreed a plan to retain more of the money collected in business rates.
Mr Khan announced the deal with local councils on Wednesday, saying it would allow London to keep funds raised from increases to the rates.
Business rates are a tax on a company's premises, collected by local councils but set by the government. The new deal would mean the capital retaining any future increases in business rates, rather than passing them to the government.
Councils in London currently collect more than £8bn in business rates every year, £2bn of which is handed to the government to fund services elsewhere in England.
Many high ranking figures in the capital have argued that it should retain all revenue derived from business rates. At present, London controls just 7 per cent of all taxes paid by its individuals and businesses.
The increased rates have also been met with fierce criticism from local businesses, who claim the government is exploiting the capital's "cash cow" economy. The government has yet to approve the new proposals.
Mr Khan said: "This is an important step in devolving more control over the use of the capital's tax revenues to London government.
"But it is only a first step as the government will still retain control of business rates tax policy, revaluations and the business rates appeal system."
In March, Chancellor Philip Hammond outlined a £435m "hardship fund" for companies affected by the hike but the London Chamber of Commerce said his package did not go far enough.
