What Delayed Rate Cuts Mean for Your Business Cashflow & Tax Planning

The Bank of England has hinted that interest rates could stay higher for longer, despite inflation slowly cooling. For businesses and individuals alike, this raises a critical question: how do prolonged high rates affect financial planning?

Why it matters

High interest rates mean borrowing is more expensive. Mortgages, business loans, and overdraft facilities all cost more, squeezing cashflow. For businesses reliant on debt to fund operations or growth, this can be the difference between healthy expansion and financial strain.

For households, higher mortgage repayments cut into disposable income, indirectly affecting consumer spending—which can reduce revenue for businesses.

The accountant’s role

Accountants aren’t just here to record figures. In a high-interest environment, they can help:

Cashflow Forecasting: Modelling repayment schedules and planning for worst-case scenarios.

Refinancing Strategies: Reviewing existing loans and advising whether to fix or float interest rates.

Tax Planning Opportunities: Interest payments on business loans remain deductible. Smart structuring ensures businesses aren’t missing reliefs.

Scenario Analysis: Advising on what happens if rates remain elevated into 2026, versus scenarios where cuts eventually arrive.

Practical steps for businesses

Review your debt: Identify which loans are variable and most exposed to further rate hikes.

Plan conservatively: Assume high rates last longer—don’t budget for sudden relief.

Maximise tax efficiency: Ensure interest is being claimed appropriately in your accounts.

Build reserves: Cash buffers protect against volatile repayment schedules.

Final thought

The delay in rate cuts is not just an economic headline—it directly impacts day-to-day business decisions. By working with an accountant, businesses can protect cashflow, prepare for refinancing, and position themselves to weather prolonged financial tightening.