SMALL businesses look set to bear the brunt of Chancellor Gordon's Brown's moves to balance the nation's books in the spring Budget, the Federation of Small Businesses (FSB) warns.

The FSB, which represents the interests of more than 12,500 member businesses across the Yorkshire region, believes that on Wednesday, March 17, the Chancellor may launch a series of measures targeting entrepreneurs.

The business organisation predicts that Mr Brown will force small limited companies to pay National Insurance on dividends, end tax breaks available for IT investments, and seek ways to increase business rates, use employers to collect tax from employees on income earned elsewhere and tighten up the inspection regime for legitimate businesses without tackling those trading illegally.

Tony Cherry, policy chairman of FSB Yorkshire and Humber, said: "Gordon Brown's options for small limited companies include treating dividends as salary and charging National Insurance on them, or imposing an investment income surcharge.

"The FSB has repeatedly warned that the Government was storing up trouble by creating a tax system where the self-employed can pay 32 times more tax than their incorporated counterparts. As a result, many sole traders and partnerships have incorporated. The Treasury has been left out of pocket and looks set to retaliate."

On the 100 per cent allowances for IT equipment investments, Mr Cherry added: "There is still a significant minority of business owners who are not computer-literate and need encouragement to get on-line. The current tax break was extended for one year in 2003. It is essential that the chancellor gives it a longer life. "

"We are also seeking a 100 per cent allowance to ensure that all business premises comply with the Disability Discrimination Act.

"There is a strong business case for ensuring that goods and services are accessible to people with disabilities but there are genuine cost implications for small firms too."

Updated: 11:00 Friday, March 05, 2004