Tax rises aimed at inherited wealth are at risk of backfiring, after the chancellor was accused of betraying small family businesses while letting private equity bosses off the hook.

Labour’s first budget in 14 years included measures to close inheritance tax (IHT) loopholes and press ahead with scrapping the controversial non-dom tax status, as well as levying higher taxes on private jet flights.

But Rachel Reeves came under fire from campaigners for pulling her punches on the rich, while she also faces a furious backlash from farmers and small business owners over fears that tax rises could force family firms to sell up.

From April 2026, a 20% tax rate – half the headline inheritance tax rate of 40% – will be applied to the value of farms and businesses worth more than £1m when they are passed on.

Tom Bradshaw, the president of the National Farmers’ Union (NFU), said two-thirds of farms would now be subject to inheritance tax, labelling the change “disastrous”.

“This budget not only threatens family farms but also makes producing food more expensive,” he said, adding that costs would be passed on to consumers.

Chris Groves, of Withers Worldwide, which advises clients on tax issues, said many would react with horror. “I’ve got a client who built a big international brand and is in his 80s. He wants to pass it on to the next generation. Now he’ll have to sell that business or move abroad,” he said.

Groves said generations-old family firms could end up locked in power struggles reminiscent of the dynastic disputes in the TV series Succession, or selling at knockdown prices. “Impatient heirs and private equity funds looking to pick up businesses” would benefit, he said.

Peter Harker, a partner at the accountancy firm Saffery, said the measures would catch small businesses. “You’re not talking about the super-rich here,” he said. The inheritance tax rises come “quite a long way down society,” he said.

The lobby group Family Business UK accused the chancellor of a betrayal of family business owners.

Under the IHT changes, pensions will be subject to inheritance tax from April 2027, while shares on the Alternative Investment Market (Aim) will be taxed at 50%, having previously been exempt. However, the Aim market rose 4% on Wednesday, as some investors had feared relief on the stocks would be abolished altogether.

In total, Reeves’ changes to inheritance tax are slated to raise more than £2bn, compared with a total take of £7bn now.

While family firms braced for the impact, the private equity industry stands to benefit from a lower-than-expected rise in capital gains tax on “carried interest”, the share of profits that bosses make on successful deals.

Labour was widely expected to target receipts of more than £500m a year by raising the rate from 18%-28% to a level in line with income tax, up to 45%. Instead, the rate will rise to 32%, raising £300m by 2030.

In a restaurant near Bond Street, a group of fund managers celebrated their lobbying “coup” over lunch. One told the Guardian they had “pulled off the negotiation of a lifetime”.

“We got them down to 32% and made them feel like they had to be grateful for it,” one said.

Robert Palmer, the executive director at Tax Justice UK, said the change was a “big climbdown in the face on intensive lobbying from some of the richest people in the UK”. He welcomed measures on IHT and non-doms but said it was “disappointing that the chancellor didn’t look to the super-rich for a greater proportion of the tax rises”.

Wealth advisers said clients were already looking for ways to put their assets out of reach of the chancellor’s plans, including offshore trusts and taking out life insurance to hedge against death duties.

“There are no prizes for being the richest person in the graveyard,” said Robert Record, a partner at Partners Wealth Management.

Obi Nnochiri, a private client consultant at St James’s Place, said most clients were unlikely to leave the UK over the loss of non-domicile tax status, which allows people to live in the UK but pay tax in a different jurisdiction.

He said the “vast majority of these changes are taxes on wealth to a certain extent”, but that clients would find ways to minimise the impact between now and their implementation.

Luke Hildyard, of the High Pay Centre, said taxes on the wealthiest were “less ambitious than many people were expecting”.

Reeves did announce a 50% increase in air passenger duty on private jet passengers, equivalent to £450 per passenger, which she said would raise more than £700m.

One wealth adviser said: “You can’t really complain about that. If you can afford a private jet, you can afford to pay that tax.”