Royal Mail's 'stealth tax' on posting parcels: Small businesses in despair after packaging bills double New pricing system for small parcels more than 8cm high A parcel that used to cost £2.70 now costs £5.65 because it is too big Small businesses say their postage bills have rocketed as a result Royal Mail has been accused of implementing a "stealth tax" on small businesses by increasing the cost of sending a parcel by up to 100 per cent. Small business owners say the increases are crippling their finances as their postage bills rocket. It is the latest in a series of moves designed to prepare Royal Mail, owned by the Government, to be sold or floated on the stock market. Costly: Royal Mail has been criticised for a complex new pricing system for small parcels which has seen costs soar Royal Mail has already been allowed to dump its pension fund black hole of £9.5billion on to the taxpayer. Regulator Ofcom has also scrapped rules which used to limit how much Royal Mail could raise the cost of a first-class stamp each year. This resulted in a jump from 46p to 60p. Now Royal Mail has introduced a complex new pricing system for parcels. For many small business owners, a parcel which used to cost £2.70 now costs £5.65, an increase of 109 per cent, because it is just too big to qualify as a "small parcel." Helen Palmer with her cake box which has fallen victim to Royal Mail's new pricing system for parcels Helen Palmer spent £8,000 developing a box which could be used to send six cupcakes through the post. It was launched in November with great success and she has sold around 7,000 - but the Royal Mail's price changes mean that while before April it cost £2.70 to send the box and six cupcakes by first-class post, since April 2 the price is £5.65 - a 109 per cent rise. This is because Royal Mail has changed its size categories and put an 8cm height restriction on small parcels. The cupcake box is 10cm high so does not qualify for the new £3 rate. Mrs Palmer, who with partner Michelle Snook runs Card Cuts from a farm in Waldron, East Sussex, said the "outrageous" price rise has left her "snookered." She said: "If we were to make our box smaller, which would mean us making another significant investment, we have no guarantee that Royal Mail will not make any further changes. We are in the middle of designing a smaller box for one cupcake, but we are unsure whether to take this forward or not. Using second-class post is not viable because of the need to ensure the cupcakes are delivered fresh, Mrs Palmer said. Zoe Friskney, of Nelly Pepper, a small firm selling home accessories, said: "It is a bit like a stealth tax." She used to send ten to 15 packages a week via Royal Mail's second-class delivery service, but has now switched to a rival courier. David McDaid, of Silk Blooms, which makes artificial flower displays, said: "I can't believe it has come to the point where top quality couriers are cheaper than the Royal Mail." He sends around 30 parcels every day, but said he is already getting customers emailing him to complain "about "extortionate" postage prices. A petition on the Downing Street website, which warns of "a deleterious effect on small business," has attracted nearly 5,000 signatures. Mike Cherry, of the Federation of Small Businesses, said: "The Government should be doing all it can to support small businesses, and we urge it to look again at this problem." A Royal Mail spokesman said the price changes vary depending on size and weight and in some cases prices have dropped. He added: "Royal Mail has been losing money on delivering larger, heavier items that are typically delivered by van. We are increasing parcel prices to more closely align them to the cost of handling and delivering those items, like any other business would do.