It is increasingly likely that Chancellor Rachel Reeves will increase National Insurance contributions (NICs) for employers in this month’s Budget. Experts have warned the move – whether it be a straight rate rise or applied to pension contributions – is poised to come with “some nasty side effects” for workers.

With two weeks to go until the Budget, Keir Starmer hasn’t ruled out increasing national insurance on employers. That’s prompted pushback from business groups, who have warned that raising the payroll tax would hurt economic activity, with a particular impact on the retail and hospitality sectors.

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The chancellor was speaking at the government's International Investment Summit, where deals worth £63bn were hailed.

The tax expert adds that in the extreme case that an increase of one pence per pound in employer NICs was passed on to employees in the form of lower wages, the measure would only net £4.5 billion a year. He adds that the end figure would probably be a little higher than this, but much less than a previous HMRC estimate of £8.5 billion.

Rachel Reeves will announce Labour’s first Budget in 15 years later this month, leading one of the most highly-anticipated fiscal events in over a decade. As the chancellor looks to fill the £22bn “black hole” in public spending she announced in late July,

Business groups hit out after the chancellor signals she will raise the amount employers pay in National Insurance.

The Chancellor told ministers on Monday that plans to fill a £22 billion black hole would be enough only to ‘keep public services standing still’.