The Annual Investment Allowance (AIA) will remain at the annual limit of £1 million for a further year until 1 January 2022.
The allowance was due to reduce down to £200,000 from 1 January 2021, but it will now remain at £1m following a government rethink.
The cost of qualifying plant and machinery expenditure, up to the £1m annual limit, can be claimed upfront for tax purposes under the AIA.
Responding to the announcement, Saffery Champness said this was good news for an under-pressure rural and agri sector.
Martyn Dobinson, partner at the firm said: "Businesses will be able to claim 100% tax relief on qualifying plant, machinery and equipment capital expenditure of up to £1m in their financial year, for a further 12 months.
"This will accelerate tax relief and reduce tax cash outflow for those taking advantage of the extension. We very much welcome this move.”
Qualifying expenditure for farming and other rural businesses may typically include vehicles; ‘integral features’ of buildings and structures; storage tanks and slurry storage systems; IT and robotic systems; and wind turbines.