Tax rises may tip more firms over the edge, says insolvency practitioner

Higher employment costs as a result of the budget may push more businesses into financial difficulty, according to the UK's largest insolvency practitioner.

- Jasper Jolly

Begbies Traynor said in a statement to the stock market yesterday that increased employment costs, as well as higher interest rates, would extend a period of "elevated insolvency levels".

The Labour government raised taxes on business steeply in the budget last month to cover the cost of increased spending on the NHS, schools and the armed forces.

The decision by the chancellor, Rachel Reeves, to raise employers' national insurance contributions (NICs) prompted a chorus of protests from businesses. Unlike corporation tax, a rise in NICs affects every business with employees, whether profitable or not.