The vast majority of UK businesses are paying more tax than ever before, prompting many to consider making job cuts, according to research published today.

With only a month to go before Chancellor Gordon Brown announces his Budget, more than two-thirds of British businesses (78 per cent), claim not to have benefited from the tax breaks introduced over recent years.

Staff cuts, a halt in future recruitment and a pay freeze are among the options currently being considered by company bosses ahead of the Budget, with the expected National Insurance hike causing widespread concern.

Only 23 per cent of employers said they would absorb the cost without taking drastic measures.

The Institute of Directors (IoD), which conducted the poll, said the rising tax burden was stunting growth and turning employers into unpaid tax collectors.

Derek Brownlee, tax executive at the IoD, said: "At a time when taxes have increased and are set to increase yet further, our survey reveals widespread discontent with current UK fiscal policy and the administrative burdens which accompany it."

The survey also found increasing confusion over tax credits. Four in ten businesses are not prepared for the Working Tax Credit, which will replace the Working Families Tax Credit in the coming months.

Ruth Lea, head of the Policy Unit at the IoD, said: "The figures say it all - 79 per cent of UK businesses are now paying more tax, with only 3 per cent paying less. Equally, 77 per cent are spending more time and money on tax related administration.

"Not only is the rising tax burden discouraging investment and holding back growth, it is also distracting employers from doing what they do best - running their businesses - and is turning them into unpaid tax collectors."