The 2008 Budget, out next week, is likely to heap an unfair tax burden on many smaller firms, such as craft bakers and bakery retailers, according to the Forum of Private Business (FPB).

In his Pre-Budget Report and the Comprehensive Spending Review of 9 October, 2007, Chancellor Alistair Darling revealed that small firms’ corporation tax contributions would increase from 19% to 22% from April 2008. However, the higher rate of tax to be paid by large firms will be reduced from 30% to 28%.

In addition, Capital Gains Tax taper relief will be brought to an end. Following sustained pressure from the FPB and other groups, the Government partially restored the 10% rate, but, after the first £1 million in asset sales, the higher 18% rate will still be imposed.

"The FPB is urging the Chancellor to radically rethink many of his ideas, in particular his tax plans, which specifically disadvantage smaller businesses," said the FPB’s policy representative Matt Goodman. "Issues such as excessive legislation and unfair competition must be addressed as a matter of priority."

Research carried out by the FPB show that 97% of respondents believed recent tax changes had made the UK a worse place to do business.