Alistair Darling should rein back on plans to make husband and wife companies pay more tax, the Federation of Small Businesses has urged in its pre-Budget submission to the Treasury.

The chancellor has been planning to change the rules which allow married partners to use “income shifting” to pay less tax on family-owned small companies. The plan follows last year’s defeat for HMRC in a court case brought against Arctic Systems, an IT consultancy owned by a married couple.