The FPB believes that replacing the 10% taper relief on asset sales with a flat 18% rate would pile even more pressure onto small businesses, which have already been hit hard by increased Corporation Tax. Business owners also fear the introduction of supplementary business rates and feel that they are not being listened to by the Government.

Mr Osborne met with the FPB's Chief Executive, David Roughley, and Campaigns Manager, Matt Hardman, who impressed on him that members had expressed outrage at this latest proposal, and other policies of Mr Brown's government that appear to target smaller businesses.

A move by the Chancellor, Alistair Darling, to try to soften the blow by handing the owners of small businesses £100,000 in tax relief when they retire and sell up does not go far enough, the FPB believes. Many of the FPB's members have backed Mr Osborne's calls for a complete u-turn on this proposal, which would see them paying almost double the amount of Capital Gains Tax on their asset sales.

"Mr Darling seems to have recognised that this was an ill thought-out policy," said Mr Roughley. "It's a start, but reducing the burden for business owners on the verge of retirement is only a small step. We are glad that we have got George Osborne's support on this. The FPB believes that the Chancellor has not gone far enough, and that serial entrepreneurs investing in and selling companies will still be deterred by the change."

FPB member Omar Ashlan, who owns Amador, an art gallery in Knutsford, said: "It is heartening that Mr Osborne is backing the campaign, considering the fact that the original proposal to change to Capital Gains Tax could have ruined the retirement plans of someone who has already spent years paying their business rates. The Government should reverse its decision without delay."