In last week's budget, Gordon Brown targeted "artificially incorporated" companies by raising corporation tax from 19p to 20p for small businesses (set to rise to 22p in 2009). But in this attempt to "ensure fairness across the tax system" (HM Revenues & Customs), are small businesses across the board paying the price?

By April 5th, contractors in managed service companies including IT specialists, plumbers, engineers and others will be treated as employees. As a result, some have incorporated as businesses to take advantage of the tax benefits.

Mr Brown is attempting to combat this by raising corporation taxes on small businesses and reducing the difference between rates for the self-employed and for small businesses.

The chancellor's assurance that he "will take action in a way that will not raise the tax burden on the self employed and small businesses overall" refers to changes to tax relief rules, including 100% relief for new capital investment of up to £50,000 from £10,000. However, there are concerns that this will not be enough to balance the effect of the corporation tax increase for many small businesses.