How the Bank of England’s rate cut could impact your construction or trade business

22 August 2025

The Bank of England has reduced the base rate to 4%, the lowest since 2023. While most headlines focus on mortgages and savings, this decision has a big impact on trades and construction businesses too. From borrowing costs to cash flow, here’s what it means for your business.


Cheaper Borrowing for Business Growth

Lower interest rates mean reduced costs for loans, hire purchase, and finance agreements. For builders, electricians, plumbers, and other trades, this could make it more affordable to:


  • Finance a new van or company vehicle
  • Invest in tools, machinery, or equipment upgrades
  • Expand your workshop or office space
  • Take on larger contracts with upfront costs


Even a small drop in repayments can improve cash flow, giving your business more breathing room.


Relief on Existing Business Debt

If your business already has a variable-rate loan, overdraft, or finance agreement, you may notice lower repayments straight away. This could save your construction or trade business hundreds of pounds a year, money that can be reinvested into staff, materials, or marketing.


More Demand for Construction and Trade Services

Lower interest rates don’t just help businesses, they also boost consumer confidence. With households feeling more secure in their finances, many will be more willing to spend on home improvements, extensions, and renovations. This creates new opportunities for builders, roofers, joiners, and subcontractors across the construction industry.


But Inflation still matters

It’s important to remember that inflation is still running above the Bank of England’s target. For trades and construction businesses, that means material costs, fuel, and supplier prices remain high. Even with cheaper borrowing, keeping a close eye on quotes and project costs is essential to protect your profit margins.


What you can do next

Here are some practical steps for construction and trade businesses following the rate cut:


  • Review your finance agreements – check if your loan or overdraft repayments will fall.
  • Plan for investment – if you’ve been holding off on buying equipment, now may be the time.
  • Monitor cash flow closely – strong bookkeeping helps you make informed decisions and spot risks early.
  • Build inflation into quotes – don’t get caught out by rising material prices.


If you’d like support with bookkeeping, cash flow planning, or financial strategy, we’re here to help

VAT Returns Made Easy: Avoiding Mistakes & Penalties

by PH186232 • 20 November 2025
VAT doesn’t have to be stressful. But with tighter HMRC rules and full MTD for VAT now in place, mistakes can lead to penalties, overpayments, or missed claims.

MTD ITSA: What Sole Traders & Landlords need to know for 2026

24 October 2025
Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA)

MTD for Income Tax: What trades and construction businesses need to know

by PH186232 • 30 July 2025
If you're a sole trader or landlord earning over £50,000 a year, big changes are coming your way. From April 2026, you'll need to comply with Making Tax Digital for Income Tax (MTD for ITSA) and while that might sound like it's a long way off, it’s closer than it seems. At Books and Business, we work closely with those in the trades and construction sector, and we know that admin is rarely top of the to-do list when you're running jobs, managing quotes, and keeping customers happy. But this change will affect how you keep records and report your income, so starting early is key. Lets get into what MTD for ITSA means for your business and more importantly how we can support you every step of the way.