Small business owners have said they are “seriously concerned” by the prospect of tax rises in Wednesday’s Budget, with some fearing they will need to cut their employee headcount.

Chancellor Rachel Reeves is expected increase employer contributions to national insurance by at least one percentage point as the Government seeks to raise funds without hiking taxes on “working people”, as per its manifesto promise.

Steve Luke, 56, owns a paraplanning business in the financial services sector, employing nine people including himself, and said he is “really anxious” ahead of the Budget.

The business owner, based in Newcastle, told the PA news agency: “I’m seriously concerned that if the Budget is as bad as I’m expecting then we may have to reduce the workforce from nine to seven or eight.”

Steve Luke said he is ‘really anxious’ ahead of the Budget (Steve Luke/PA)

Mr Luke said he is particularly concerned Labour will not view him as a “working person”, after Sir Keir Starmer told Sky News he does not consider people who have an income from assets such as shares of property to be working people – a suggestion Downing Street later rowed back on.

“Myself and my business partner take a small salary then pay ourselves a dividend, as our business income fluctuates so much we can’t guarantee to cover a fixed salary each month and take dividends as and when it is appropriate,” said Mr Luke.

“The potential increase in employer national insurance is also going to cut right into our very small margins, which is why we will possibly end up having to let one or two people go.”

Farmer and landlord Richard Payne, 61, said he is “extremely nervous” ahead of the Budget because he is worried about taxation of his profits, inheritance tax and business property relief.

The farmer, based in Somerset, owns around 500 acres of land and rents an additional 150-200 acres to farm wheat, barley, oilseed rape and canola.

Mr Payne told PA: “It would look like SMEs are going to be clobbered hard.

“Whilst I’m probably not going to be clobbered hard on national insurance contributions, because we don’t employ a huge number of people… I’m more worried about taxation on profit, if we make any, and also, in my case, losing agricultural property leave or business property relief on our assets.”

Mr Payne employs one person part-time, owns several business units on the farm, and rents out two cottages.

“I feel very, very nervous that I’m going to be clobbered for a job that really hardly pays me, but I do it because I don’t know how to do anything else and I’m really nervous about what effect this Budget is going to have on SMEs and me personally,” he said.

Specifically citing a possible increase in inheritance tax, the farmer said: “Let’s say my son wanted to go into farming and carry on the business – if he had to raise inheritance tax on the land, he’d have to sell 40% of the farm, and then what would be left.

Farmer and landlord Richard Payne (Richard Payne/PA)

“That really worries me, because I don’t believe they understand farming and they don’t understand food production. They just believe it all appears on shop shelves, supermarket shelves, by magic.”

Joy Francis, who owns two nurseries in Wellington and employs 22 people, said she is also concerned the Government will increase employer’s national insurance contributions.

Ms Francis, 76, told PA she runs the nurseries with “love and compassion” but added: “We do have to make a profit, otherwise 22 people would be out of a job, over 100 parents would have no childcare so parents wouldn’t be able to go to work.

“(The Government) just doesn’t seem to grasp the concept of small businesses being the backbone of the economy and we’re not all money-grabbing people with shareholders to pay.”