Rachel Reeves's quiet move that will vandalise the fundamentals of UK economy

For centuries, family firms like mine have been the backbone of the British economy. Family-owned companies make up 90% of all private businesses. There are an estimated five million and they employ nearly 16 million people - about a third of the UK workforce. These enterprises are built on generations of hard work, investment in jobs and longterm commitment to local communities.

It was for precisely this reason that, back in 1976, a Labour Chancellor, Denis Healey, introduced Business Property Relief (BPR). It was designed to reduce inheritance tax on business assets and make it "particularly helpful to the small businessman transferring his business over a period to his successors". So it beggars belief that current Labour Chancellor Rachel Reeves has quietly sprung a sweeping reform on family businesses - one that threatens to vandalise the very fundamentals of our economy.

Her changes will mean an increase in inheritance tax from zero to 20% on all assets worth more than £1million. That might sound a lot but, in fact, many modest family firms with small numbers of employees will be dragged into the net.

We've heard a lot about the impact of inheritance tax changes on family farms, but the impact on family firms will be even worse. Many mediumsized family businesses are assetrich but cashpoor - holding land, machinery or buildings rather than cash. These are exactly the businesses BPR was devised to protect. Now they're being hit with an unexpected tax bomb.

Ultimately, family businesses will in many cases be forced to liquidate assets simply to pay tax - hollowing out jobs, allowing private equity to swoop in at bargain basement prices and undermining communities. That's the opposite of what any government serious about growth and jobs should allow.

Global Brands, my firm, employs 450 staff in Chesterfield. My son works in the business and stands to inherit. But under the new regime he would face a tax bill of approximately £7million. That is a sum only payable by either breaking up the company or selling it altogether. Who knows what private equity or a foreign owner would do to the firm and its employees?

My tax adviser has already told me to leave the country - not something I want to contemplate - and I know dozens of other owners like me who have made decades of investment in staff, innovation and facilities only to discover the rug has been pulled from under them with almost no warning.

Even before this change takes effect, there is clear evidence of harm being done to the economy. A survey of family firms across the UK found the introduction of inheritance tax on estates is leading them to cut back on hiring and investment, with some considering selling up altogether.

The survey of 4,200 companies by Family Business UK found more than half (55%) said they have already paused or cancelled planned investment, and 44% expect they will pause or cancel spending plans before April 2026. Just under a quarter said they have stalled on hiring or cut jobs.

It is estimated that overall, 208,000 jobs will be lost in the sector from 2026-29. That means fewer employers and employees paying tax. The Government has estimated that the inheritance tax changes will raise £500million a year for the Treasury from 2027. But if 208,000 jobs are lost, the overall hit to the public finances will total £1.9billion.

The sums simply don't add up. What's needed is a new assessment of the impact and a proper consultation with family business leaders. That's why, in response to this looming disaster, a coalition of business leaders is now preparing a judicial review to force the Treasury into a full public consultation.

We're not asking for special favours or new loopholes - simply for the recognition of the importance of family firms, in place for decades, to be maintained. If ministers refuse to listen, we will see them in court. And I believe we will win. Because the livelihoods of tens of thousands of families, the future of hundreds of businesses, and the jobs of 200,000 people hang in the balance.

The clock is ticking. If you run a family business, if you employ local people, if you invest in regional Britain - now's the time to make your voice heard. Or this reform could mark the beginning of the end of what makes business special.

Steve Perez is founder of drinks business Global Brands