Did anybody see that tax rise?

My specialist field is corporation tax and I was, to put it mildly, somewhat surprised, to see the Chancellor announce that he was;

(a) abolishing the non-corporate distribution rate (introduced in 2004), and:

(b) abolishing the starting company rate of 0%,

both effective from 1 April 2006.

From an administrative perspective, it will make the tax affairs of a large number of small and medium-sized companies much simpler. On the downside, companies with profits below £50,000 will be paying more corporation tax.

For example, a company making £8,000 in profits would pay no tax at all in the year ending 31 March 2006, but in the year ending 31 March 2007, the same company will pay £1,520 in corporation tax. A company making £25,000 would expect to pay £3,562.50 in the year ending 31 March 2006, but £4,750 in the year ending 31 March 2007.

I have a nasty feeling that this isn't going to be popular and, whilst there has been some compensation in the increase in first year capital allowances (50% instead of 40%), I sense that we won't have heard the last of this...