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HMRC internal manual

Stamp Duty Land Tax Manual

HM Revenue & Customs
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Calculation of Stamp Duty Land Tax (SDLT): Rent: Variable or uncertain rent: Index linking

Variations in index linked rents where the whole of the change in the amount of rent payable is solely because of adjustments to the rent in line with the retail prices index (RPI) are ignored. In these cases the rent is not treated as variable. This includes any capped RPI adjustments that are subject to a minimum or maximum restriction. However, the definition of excluded adjustments (at FA03/SCH17A/PARA7(5)) does not include:

  • ‘RPI plus’ or ‘RPI minus’ adjustments. A rent adjustment that is RPI plus 1% must be taken into account when calculating the net present value. The whole of the adjustment cannot be said to be in line with RPI (as it is 1% more than RPI) and so does not come within definition.
  • rent adjustments in line with another index (for example, RPIX). The legislation specifically refers to the ‘retail prices index’ and not to any other index.

HM Revenue and Customs will accept that rent adjustments which are RPI based up to three months before the adjustment are ‘in line with’ RPI. Thus where the rent in June is to be adjusted by reference to the figure of RPI in the previous March, this is allowable.

It is possible to word leases so that adjustments to the rent only occur if RPI is positive, thus creating ‘increase-only’ rent adjustments. Such rent adjustments are in line with RPI and will, therefore, be ignored for the purposes of SDLT.