Four out of five family-owned businesses don’t believe the Labour Party was honest with voters about its plans for tax rises in the lead-up to the election, according to Family Business UK.

In an escalation in the language used by some of Britain’s largest family-owned companies, the trade association said the government risked “the future of British enterprise” if it withdrew or reduced longstanding tax reliefs that allow families to pass on business assets without triggering large inheritance tax bills.

Neil Davy, its chief executive, said family businesses employed 13.9 million people and contributed more than £200 billion in taxes every year, but this would be put at risk if cuts were made to tax breaks such as business property relief.

Research to be released this week by the trade body at the Labour Party conference in Liverpool will show that significant numbers of family businesses would freeze recruitment and have to sell off assets to cope with the additional costs.

Most startling was the finding that one fifth of all family firms have said they will have to close and liquidate to pay the tax charges triggered by the loss of the longstanding business property relief.

Davy said: “The chancellor has gone on record saying that businesses are more confident because the government has brought back stability. But that’s not what our research indicates — particularly for family businesses who are fearful the government may be about to pull the rug from under them, removing tax policies that underpin their very model of ownership.

“Family businesses are putting important investment decisions on hold while they remain in limbo waiting for the government to decide whether or not it will back family businesses in the budget.”

Business property relief, which has existed for decades in various forms, allows businesses to be passed from one generation to the next with either a full or 50 per cent reduction in inheritance tax, which is usually charged at a rate of 40 per cent. Every year, around 85,000 family businesses are passed to the next generation when the head of the family retires or passes away.

The trade association represents 200 of the largest family firms and its board includes prominent business leaders, such as Sir James Wates, the former chairman of the construction group Wates, Chris Bailey, a director of the engineering services firm NG Bailey, Chloe Benest, chair of the family council of Bettys and Taylors of Harrogate, and Steve Rigby, co-chief executive of the IT services-to-airports conglomerate Rigby Group.

In the survey by Censuswide for the association, just over a third of family businesses believe Rachel Reeves, the chancellor, will significantly raise taxes on businesses in her budget on October 30. As a result, 27 per cent expect to freeze recruitment, and 12 per cent will look to make redundancies to cover the expected increased costs. A quarter will look to pause investment in key areas.