BRITISH manufacturing is facing a tax bombshell of nearly £1 billion because of today’s 1.25 per cent rise in National Insurance, Labour has warned.

The increase is one of just 15 tax rises imposed by Tory Chancellor Rishi Sunak in the last two years despite the soaring cost of living putting unbearable pressures on working people, the party charged.

Labour’s challenge came as the Independent charged that Mr Sunak’s own wife has used non-domiciled status to avoid paying tax in Britain even while he governs the country’s finances as Chancellor.

Akshata Murthy, whose family business is estimated to be worth around £3.5bn, has used the valuable tax status at least as recently as April 2020, the newspaper understands.

Activists wearing face masks depicting the visage of the Yorkshire MP, thought to be the richest man in the Commons, visited the Treasury today, brandishing 15 tax bills that increased in size, one by one.

A combination of skyrocketing inflation — currently at a 30-year high — and the biggest tax burden since the 1950s is set to leave households £2,620 worse off amid the biggest drop in living standards since records began, Labour argued. 

Its latest analysis suggests that the national insurance rise, which applies to employers as well as workers, will result in an £895 million hit to manufacturing, while construction faces a £400m bill.

The mechanics and wholesale and retail industries are also preparing to fork out an additional £935m, Labour said.

The party has proposed a new emergency support package for business which would cut taxes for small firms, saving the average small factory or workshop over £2,000, and introduce help with energy bills for industries that have to consume more such as steel. 

Shadow business secretary Jonathan Reynolds said: “Businesses are being held back by a Conservative government that isn’t on their side.”

Shadow chief secretary to the Treasury Pat McFadden said working families felt “more insecure than ever.”

“Labour would tackle the Tory cost-of-living crisis by cutting energy bills by up to £600, funded by a one-off windfall tax on the excess profits of the oil and gas producers.”

The government claimed that it will protect the most vulnerable by raising the threshold at which employees start to pay national insurance and increasing employment allowance from £4,000 to £5,000 to help smaller firms.