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Does making an R&D claim always have a positive impact on cash flow?

A typical R&D claim will have a positive impact on cash flow. This isn’t the case for the SME scheme, if you’re not making a profit, your R&D tax credits will essentially partially or fully offset your pre-existing losses. This is important to consider early on in your R&D claim as it may be the case that the R&D scheme may not financially benefit your specific situation.  Sometimes, preserving or increasing losses can be just as valuable as obtaining cash, especially if these losses can be utilised for tax relief. With the RDEC process, which involves caps and offsets, a claim might result in the creation of an RDEC that can be carried forward. However, converting this into cash will depend on future calculations in subsequent years through the RDEC steps. For profitable companies, RDEC will always have a positive impact on cash flow since the first step offsets against corporation tax.

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R&D tax credits

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