Fuel tax is due to increase by 23%, 12p a litre, in April.

But research from the Federation of Small Businesses (FSB) shows that this could have big consequences for small firms

Small firms grappling with rising fuel costs are calling on the Chancellor to scrap the planned increase at the upcoming Spring Budget.

In total, 89% of firms reported an increase in the cost of running their business this year - and 61% of rural businesses cite fuel costs as one of the main drivers, while this drops to 51% for city-based firms.

Rural-based firms are at a higher risk of potentially needing to downsize, close or radically change their business model (18%) compared with 12% in urban areas.

This fuel duty hike could intensify the cost-of-living crisis, with road users set to collectively face an extra £5.7 billion in taxes.

FSB national chair Martin McTague said: "The Chancellor didn't mention this fuel tax bombshell in his Autumn Statement, with the Government instead slipping it out in weighty official documents afterwards.

"If fuel duty rises as planned, it would represent a missed opportunity to remove one of the obstacles that will hinder growth - but the Chancellor still has the power to rectify that mistake in next month's Spring Statement.

"Small firms are already struggling with a cost of doing business crisis, led by rampant inflation and high energy bills. This is the worst possible time to pile on extra taxes.

"FSB is particularly concerned about the impact this will have on rural small firms - for instance, a cosy coffee shop in the South West that relies on customers driving there if petrol becomes more expensive. Firms that rely on cars and vans for petrol, such as delivery services, tradespeople and farmers, would also bear the weight of the impact.

"The Government must support the small businesses that form the backbone of our rural economy. But now, many of these businesses face the harsh reality of downsizing, closing or changing their business models.

"Small businesses played a significant role in driving the economy and getting people into work after the 2008 financial crisis. The Government is making the right noises about the tools needed for them to get through and thrive - let's not pull the handbrake on growth with a fuel duty hike."