Business leaders are urging chancellor Rishi Sunak not to raise corporation and capital gains taxes in the upcoming Budget and support entrepreneurs instead.

The Institute of Directors has put forward suggestions for Sunak ahead of the March 3 Budget. These include providing income support to owner-directors, which it argues were left out in previous support packages.

With reports of possible rises in corporation tax and capital gains tax or even a windfall tax in the budget, Jonathan Geldart, director-general of the institute, said: ‘Tax hikes risk choking off the economic recovery before it has even got started. It is paramount the existing package of grants, loans and reliefs is extended. A cliff-edge in support would be disastrous for business.’

He added that company owners, who had received little direct support during the pandemic, deserved a ‘one-off grant package’.

He added: ‘It is high time the millions who have not qualified for significant income support, like owner-directors, are given some reprieve.

‘Entrepreneurs need to be at the front and centre of the government’s recovery plans.

Businesses will be creating the jobs and driving the innovation that the economy needs to rebuild – and this Budget must support them

‘Slashing the burden of business rates and employers’ NICs will also help create the margins for firms to hire and rescale,’ he said.

The IoD’s Budget proposals include a temporary cut in employers’ national insurance contributions, targeted business rates relief for the hardest-hit companies and extending the present measures such as furlough ‘as long as restrictions continue’.

Restrictions on the Enterprise Investment Scheme, which provides tax breaks for scale-up investment, should be eased and the maximum investment relief for the Seed Enterprise Investment Scheme should be doubled.

The institute also called for Brexit adjustment vouchers to help businesses with the disruptions and costs of trading with the European Union.