Business groups reacted with surprise and dismay today as Gordon Brown raised corporation tax for small companies in his eleventh budget.

For large firms the Chancellor said he would cut mainstream corporation tax from 30 pence to 28 pence. But small firms were singled out for a rise from the current 19 pence to 22 pence in 2009.

"I do need to act to deal with individuals artificially incorporating as small companies to avoid paying their due share of tax, a practise if left unaddressed would cost the rest of the taxpaying population billions of pounds," Mr Brown said.

He said that he would "recycle" the extra revenue "to legitimate small businesses investing for the future.

"Small firms will be able to claim the new 100 per cent relief for new capital investment up to £50,000, claim a 175 per cent tax credit for R&D, and claim the new tax credit for environmental investment."

He said that this meant a company with profits of £150,000 that invested £50,000 of this would effectively pay corporation tax of just 15 per cent.

But small business groups and tax experts said that savings were not likely to materialise.

"This [calculation] is based on an incorrect assumption that these companies will be aware of the reliefs and actually claim them," said Kevin Nicholson, head of private entrepreneurs at PriceWaterhouseCoopers.

Many were too busy or lacked the expert staff to keep up to date with the details of every tax scheme which may or may not apply to their company, he said.

Accountants said the investment allowance applied only to plant and machinery and that a company would have to spend to the full £50,000 a year to get their tax down to 15 per cent.

A spokesman for the Federation of Small Businesses said: "This is quite distressing for a number of our members. There may be allowances in there but it's a lot more complicated to get that money back than to have it taken off you in the first place. Sometimes it's more complicated than it's worth."

Forum of Private Business chairman Nick Goulding said: “The Chancellor has used smoke and mirrors to disguise the fact that there is nothing in this budget to support small businesses.

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