More than half of the tax rises in the Budget will be paid for by businesses, with a rise in the amount paid by employers in National Insurance to generate £25 billion.

Chancellor Rachel Reeves has decided that firms will bear the brunt of her overall £40bn increase by raising the national insurance rate as well as lowering the threshold at which employers start paying.

Smaller businesses have been offered some relief or exemptions, but overall businesses face the need to pay higher minimum wages, higher business rates, as well as the cost of adapting to new worker rights under the new laws.

Reeves said increasing the National Insurance increase was a “difficult” but right choice to fund public services.

Ahead of the Budget, businesses, particularly smaller ones, warned that such extra costs could leave them with less cash to spare to hire staff or offer pay rises – and ultimately impact on the government’s objective to grow the UK economy.

But Reeves said the “only way” to boost growth was through investment and warned there were “no shortcuts”.

“We’re asking companies to contribute more,” Reeves said. “I know there will be effects of this measure felt beyond business.”

Businesses come in all shapes and sizes, which means the impact of the Chancellor’s choices in his Budget will affect them differently.

Kate Nicholls, chief executive of UK Hospitality, said the tax increases would be a “drag on growth” for the UK.

“Businesses with paper-thin margins are already facing big increases in employment costs – we’re seeing jobs and hours cut, reduced investment and business viability undermined, as well as rising prices,” she said.

• National Insurance: The rate employers pay in contributions will rise from 13.8% to 15% on a worker’s earnings of more than £175 from April. The threshold at which employers start paying tax on each employee’s wages will be reduced from £9,100 a year to £5,000. However, the chancellor said he would extend the employers’ allowance – the amount employers can claim back from their National Insurance bill – from £5,000 to £10,500.

• Minimum wage: The minimum wage for over 21s, officially known as the National Living Wage, will rise from £11.44 to £12.21 from April 2025. For 18-20 year olds, the minimum wage will rise from £8.60 to £10. Apprentices will see their pay rise from £6.40 to £7.55 an hour.

• Rates for business: The current 75% discount on rates, which expires in April 2025, will be replaced by a 40% discount, up to a maximum of £110,000. Business rates are charged on most non-domestic properties such as shops, offices, pubs and factories. It still means many companies will see their business rates nearly double.

• Workers’ rights: Plans to improve workers’ rights will cost businesses up to £5bn a year to implement, according to government analysis. The new measures will have a disproportionate impact on smaller businesses.

The government is committed to being ‘pro-business’ and has made the UK’s economy growth its main objective, to raise living standards.

But companies have warned that placing the tax burden on them will make it harder to invest, hire staff and create jobs – and ultimately hurt growth.

There are also concerns about how tax increases on businesses may affect the workers they employ.

In some cases, companies could pass on the increased costs they face through higher prices to customers, however, workers’ wage increases could be restricted as employers seek savings.

The increase in National Insurance could also have an impact on other tax revenues, for example if it results in lower wage increases. If businesses absorb the extra costs, profits could be lower and the amount they pay in corporate tax could be lower.

Large multinational corporations are likely to be able to shoulder and absorb the additional costs, but smaller, independent companies will be hit harder by the tax increase.