The Resolution Foundation is calling on the chancellor Rachel Reeves to increase income tax by 2p to 22% for the basic rate and offset this with a 2p cut in employee national insurance contributions (NICs) at the Budget in November.

The left leaning think tank, Resolution Foundation, said this would raise £6bn a year, stressing the government needs to ‘level the playing field’ while not breaking Labour’s election manifesto pledge not to raise tax on ‘working people’. However, the proposals would hit pensioners and buy to let landlords as they do not have to pay national insurance.

They are also calling for a major change with an extension of employer national insurance to limited liability partnerships (LLPs), a move that would affect the majority of accounting and professional services firms and raise £1bn.