The Conservative Party has urged the government to scrap the planned 2% rise in the rate of corporation tax for smaller businesses and called for a further cut in the main rate of corporation tax.

Corporation tax is set to fall from 30% to 28% in April but the rate companies with annual profits of less than £1.5m pay is to rise 2p to 22p in the pound.

"I am suggesting a simplification of the system, getting rid of the very expensive reliefs and allowances that exist within the corporate tax system, and using the proceeds to cut the headline rate," said shadow chancellor George Osborne.

Osborne is proposing a cut for main corporation tax to 25p in the pound but overall levels of business tax under the Conservatives would remain the same.