The Federation of Small Businesses (FSB) said that Alistair Darling's PBR had added to the tax burden on small firms, with changes to the capital gains tax leaving millions of entrepreneurs out of pocket.

This comes on top of anger at Gordon Brown's last Budget as Chancellor, which reduced corporation tax for large companies but raised it for small enterprises.

An FSB spokesman said:

"The UK's small business community, which contributes over half of the country's GDP, will not be helped by a less generous capital gains tax scheme."

The FSB welcomed proposals to simplify the tax system for small firms, but the spokesman added:

"Overall, though, this PBR looks set to increase the financial burdens on small businesses at a time when they are contributing more than ever to the UK economy. The Government has again failed to recognise that contribution."

Meanwhile, the Confederation of British Industry (CBI) also criticised the increase in the capital gains tax rate.

A spokesman said:

"Changing Capital Gains Tax rate to a flat rate of 18% will adversely affect the balance between risk and reward, both for entrepreneurs and for the UK's vital private equity industry.

"This move is disappointing and may lead to a reduction in investment in start up and growing businesses."