Family-run businesses in Bradford will be severely hit by government changes in tax allowances it has been warned.

The Society of Chartered Accountants has said hoteliers, manufacturers print companies and hauliers in West Yorkshire and elsewhere will be worst affected by new legislation going through Parliament.

The society wants the worst effects of the planned reduction in allowances for capital expenditure eased with grandfathering' relief. Grandfathering would mean that businesses committed to investment would receive the existing allowances.

Angela Riley, president of the West Yorkshire Society of Chartered Accountants, said: "Some of the biggest losers in the Budget were Britain's family companies, especially those engaged in more traditional industries and activities. The Chancellor aims to fund the cut in the main corporation tax rate announced in the Budget by increasing the small companies rate and reducing allowances for capital expenditure. Smaller companies that need to invest in buildings, plant and machinery are the big losers.

"Family companies making an annual profit of less than £300,000 will see an increase in the rate of tax from 19 per cent to 22 per cent. However, the real damage is done by the reduction in the capital allowances available to them.

"Family hotel companies will be badly affected. Hotels qualify as industrial buildings, and the abolition of the industrial buildings allowance (IBA) will hit them hard."

Under legislation companies such as manufacturers and hoteliers receive an allowance of 50 per cent of qualifying capital expenditure in the first year. Under new rules this would be reduced to 20 per cent. A new investment allowance of £50,000 is to be introduced aimed at protecting allowances for very small companies, but the society says this is trivial for businesses with a large capital spend.

"The problem is particularly severe for those businesses that need to use profits for re-investment," said Mrs Riley. "This used to be something that Gordon Brown encouraged."

She said the Chancellor wanted to improve finances, but unless some help is available, this is likely to be at the cost of damaging traditional British businesses.