The controversial decision to raise National Insurance rates will hit small businesses in the Richmond Park constituency with a bill estimated at £4.7m a year, it is claimed.

It is well understood that workers will have to pay more under a scheme designed by the Government to raise billions to fund the NHS, but the change will also impact businesses.

This is because employers, everyone from hairdressers and cafes to tech start-ups, will see the NI contributions they have to pay for each member of staff rise by 1.25per cent.

House of Commons Library research shows that the average micro-business, employing up to nine people, will pay more than £1,000 extra a year as a result of the tax hike.

The research was conducted by the Lib-Dems who argue the total extra bill faced by small and medium size enterprises across the constituency will add up to an extra £4.7m a year.

Ahead of the Budget this week, the Liberal Democrats are calling for small businesses to be offered a lifeline by slashing their employer's national insurance contributions instead of raising them.

Under the party's proposals, the Employment Allowance would be quadrupled from £4,000 to £16,000 for at least two years, meaning taxes on small businesses would be slashed by £5.5 billion across the country next year.

Sarah Olney, Liberal Democrat MP for Richmond Park and party spokesperson for business, said: "The Government's broken manifesto promise will create a £4.7m tax bombshell for small businesses in our local community.

"Small businesses have been hit hard by the pandemic and our high streets have been struggling for years. The last thing businesses in Richmond Park need right now are damaging tax rises.

"Richmond Park's Liberal Democrats are calling for a tax cut for local entrepreneurs and business owners, to help them create jobs and drive our economic recovery."

Christine Jardine MP, Liberal Democrat spokesperson for the Treasury, said: "We have already lost far too many treasured shops from our high streets, and too many businesses are drowning in tax rises and red tape.

"Rishi Sunak must give small businesses the chance to grow again instead of clobbering them with a crippling tax rise.

"The Chancellor is out of touch with small businesses and if he truly cared about their survival, he would cancel this tax hike immediately."