Budget Tax Raid Will Put UK Companies Out Of Business – Insolvency Expert Sounds Alarm Over £25bn Rise In IN

More companies will go bankrupt because of the budget, bankruptcy experts have warned.

As concern over the Chancellor’s tax raid on businesses showed no signs of abating, the head of

Corporate restructuring specialist Begbies Traynor said the additional costs faced by companies will lead to a prolonged period of “elevated levels of insolvency”.

Backlash: Prime Minister Keir Starmer and Chancellor Rachel Reeves are coming under increasing criticism over their so-called ‘jobs tax’

Ric Traynor also warned that the prospect of higher interest rates – partly due to the measures revealed by Rachel Reeves in the Budget – represents another “headwind” facing private enterprise.

The comments came as experts said the Chancellor’s decision to increase employer-paid National Insurance (the so-called ‘jobs tax’ which breached Labour’s manifesto) would hit hiring.

A report from data analysts S&P Global showed that employment concerns are weighing on consumer confidence.

“Job security is showing signs of slowing,” said Chris Williamson, chief business economist at S&P Global.

‘Any intensification of concerns about jobs – spurred, perhaps, by the recent measures announced in the Budget – could result in a further loss of consumer confidence. This, in turn, would likely affect consumer spending and economic growth.”

The Chancellor announced a £40bn tax rise in her Budget last month, with the £25bn National Insurance raid being the largest single increase.

This will see the tax paid by employers on staff salaries increase from 13.8 per cent to 15 per cent and the threshold at which it comes into force reduced from £9,100 to £5,000.

The rise in National Insurance – which Labor scrapped before the election – was accompanied by a rise in the minimum wage to stamp out inflation and a workers’ rights package that will cost businesses £5bn a year.

Companies have warned that the package could lead to job losses, fewer hiring and lower wages as they struggle to absorb the additional cost.

Meanwhile, the Bank of England said this month that the Budget would lead to higher inflation, setting the stage for interest rates to be cut more slowly than previously anticipated.

Traynor, one of the country’s business recovery experts, said: “Additional headwinds for UK businesses from rising labor costs and the prospect of higher interest rates for longer are likely to extend the recovery period. high levels of insolvency, increasing the need for advice and support from our insolvency and business recovery professionals.’

Begbies Traynor admitted he would not escape the consequences of the tax rises, pointing out his costs would rise by £1.25m a year. It also reported a 16 percent increase in half-year profits.

But broker Shore Capital predicted rising costs would weigh on the business, cutting its profit growth forecasts by 5 percent for 2026 and 2027.

Shares in Begbies Traynor gained 1.9 per cent, or 1.8p, to 95.4p. The Mail on Sunday revealed last weekend that the UK’s top ten employers, which include supermarkets as well as delivery giants Royal Mail and Amazon UK, are collectively facing a £1 billion tax rise as a result of the planned increase in national insurance contributions.

Neil Carberry, head of the Recruitment and Employment Confederation, said the changes to National Insurance were “a major concern” which would deter businesses from taking on part-time and lower-paid workers.

“Some of these policies are standing in the way of businesses creating jobs,” he told the BBC’s Today programme.

Jobs move overseas as costs rise

A leading recruitment executive has warned that companies are looking to move jobs abroad due to rising costs in the UK.

James Reed, head of employment agency Reed, said a “triple whammy” of higher taxes, an increase in the minimum wage and stronger laws on union and worker rights mean employers are deciding to move their functions to the foreign.

“(Offshoring) is something that people have on their to-do list and that’s just been put on the agenda because the cost of hiring has gone up,” Reed, 61, said.

He added that it is “not something companies are proud of” and would likely be implemented “in secret” to avoid problems with their workforce and customers.

The rush overseas means “thousands of jobs” could end up overseas, Reed warned.

However, he speculated that the final figure could reach “tens of thousands” as more companies consider it as an option.

Reed added that among those most likely to be moved abroad were jobs at companies focused on services such as accounting, finance, recruitment and human resources, The Telegraph reported.

He said: “Indian companies, for example, are very capable of finding highly qualified people who can do those jobs.”

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Budget tax raid will put UK companies out of business – insolvency expert sounds alarm over £25bn rise in IN

Jobs move overseas as costs rise