The Association of Chartered Certified Accountants (ACCA) says successive minimum wage hikes are having a marked impact on UK small businesses.

According to the group, many businesses are having to change their payment and recruitment practices if they are to cope with the rises.

The UK's low-pay barrier was introduced in 1999 and has risen by about 7% on average every year since. Businesses were initially supportive, but the inflation-busting hikes have turned many against the legislation.

At £4.85, business groups complain that the wage is impacting on salaries up and down the pay scale.

Yesterday, the Confederation of British Industry (CBI) called for the wage to be frozen for a year, then raised to £5 in 2006. Trade unions, meanwhile, think it should be more like £6 by then.

ACCA's survey of accountancy firms servicing around 12,000 small businesses shows that just 43% of respondents thought their clients were indifferent to the wage - the first time that more than half considered it was having a notable impact.

Of the main changes that businesses had made to their working practices, 23% said they had frozen staff recruitment, 18% had reduced overtime and 17% had cut working hours.

The proportion of members who believe that the NMW has had a negative effect on their clients' profitability has also substantially increased - 45% in 2004 compared with 22% in 2000.

Professor Robin Jarvis, head of small business at ACCA says: "It is important that workers are paid a fair wage and that employees, particularly younger individuals, are not exploited. Regular 'uprates' are important to maintain the real value of a minimum wage."

But he added: "Our latest research indicates that whilst the majority of businesses appear to have absorbed the costs of previous rises, the increases are having more impact on businesses profitability and work practices and this is a growing concern.

"The government should consider the regional and sectoral impacts of the wage when considering the size of future increases and must be careful to ensure that the wage only rises to levels that do not have a negative effect on employment and work practices."