Pressure on Alistair Darling to rethink his sweeping changes to capital gains tax (CGT) was growing last night as it emerged that attempts will be made to defeat them in the Commons.

The prospect of a key budgetary change being embarrassingly overturned will be used by MPs to persuade the Chancellor to shift on his plan to end the taper relief that allows a 10 per cent rate of CGT for small businesses.

Mr Darling was looking increasingly isolated on the plan after Britain’s four main business groups joined forces to oppose it and were supported even by some unions worried about its impact on smaller companies and the help that it gives to owners of second homes.

There were also signs that some companies were appealing over the head of Mr Darling to Gordon Brown, his predecessor at the Treasury, and telling him that the help he had given small firms was being undermined.

George Osborne, the Shadow Chancellor, told The Times that the Opposition’s focus was to campaign with business against the changes and to get Mr Darling to keep them out of spring’s Finance Bill. However, if he refused to relent, the Conservatives would vote against him in the Commons.

Any suggestion that the plans could be altered would be fraught with difficulty for the Government. Reform of capital gains tax was the chief money-raising component of the Pre-Budget Report and is intended to raise £2 billion by 2011.

Perhaps for that reason, the Treasury did not announce a full consultation on the plans, saying instead last week that HM Revenue & Customs would “immediately begin discussion on implementation with interested parties”.

Mr Darling announced that his plan to simplify capital gains tax by having one rate at 18 per cent would come into force on April 1. He argued that the switch would ensure that private equity bosses paid a fairer rate of tax. However, those in private equity concede that they have got off lightly, as many had feared that the Government might tax their carried interest as income at 40 per cent.

A storm of protest from small businesses greeted the proposal because it means the abolition of taper relief, which reduces capital gains tax for business assets held for at least two years to 10 per cent. Owners have complained that they have been hit by an 80 per cent increase in the tax that they will have to pay when they dispose of their companies.

Furthermore, the flat tax rate means that speculators and day traders will not face a higher charge. The switch is also a boon for buy-to-let investors.

In a rare move, the four big business groups — the CBI, the British Chambers of Commerce, the Federation of Small Businesses and the Institute of Directors — have joined forces against the move after being flooded with complaints from their members.

In an open letter to Mr Darling, they said that millions of ordinary employees already in company share schemes could see their tax bills soar by as much as 80 per cent, while businesses and venture capital funds would be discouraged from “investing for the long game”.

The letter came as 4,500 people signed petitions on the Downing Street website calling for the plans to be scrapped.

While the response from business to the capital gains tax reforms has been heavily critical, some independent experts have welcomed the change. Stuart Adam, of the Institute for Fiscal Studies, said that the reforms were “economically sensible”.

He said: “The justification for artificially persuading people to hold on to assets for longer than they would have done was never clear.”

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