RPI-linked rent and stamp duty on a lease
RPI-linked rent at a glance
An RPI-only rent review is ignored when considering variable rent for SDLT. The exact formula matters more than the label used for it.
- Caps and floors can still fall within HMRC’s approach.
- RPI plus or minus a percentage does not.
- Another index, including RPIX, does not qualify for the RPI exception.
Scroll down for the full analysis.
Read the original guidance here:
RPI-linked rent and stamp duty on a lease
HMRC will usually exclude an RPI-linked rise when calculating SDLT on lease rent. This can affect the tax figure.
When SDLT is calculated on lease rent, it uses a value for all future rent payments, known as net present value, and the review clause can alter that figure. This can change the tax figure. A clause that adds anything to RPI can change the answer.
What this rule is about
Commercial leases often contain rent reviews. A review may move the rent up or down by reference to inflation. RPI, the retail prices index, is one measure a lease may use.
For SDLT, rent that may change can need special treatment. The law contains a specific exception for rent adjusted in line with RPI. Put simply, for this part of the SDLT calculation, a review based only on RPI does not make the rent variable.
That may seem like a minor drafting point. It can affect the figure used for the tax calculation.
What the official source says
The legislation says to leave out a lease provision that adjusts rent in line with RPI. HMRC’s manual explains how it applies that rule to common forms of rent-review clause, including clauses whose wording adds qualifications to the basic RPI calculation. It addresses common clauses.
HMRC guidance is not the law. It does, however, set out the approach that HMRC says it will take.
- An adjustment solely in line with RPI is ignored for SDLT.
- An RPI adjustment with a maximum or minimum limit is also ignored, according to HMRC.
- An increase-only RPI clause is treated the same way by HMRC.
- HMRC accepts an RPI figure published up to three months before the adjustment.
- A clause using RPI plus an extra percentage is not an RPI-only adjustment.
- A clause using RPI minus a percentage is not an RPI-only adjustment.
- A clause using another index, such as RPIX, is not within this RPI exception.
Why does the wording matter so much? The statute refers to the retail prices index, rather than to inflation measures generally. It also requires the adjustment to be in line with RPI. A formula that changes the RPI result does not simply follow RPI.
What this means in practice
Start with the actual words of the lease. Do not rely on a summary describing the review as “index linked”. Behind that label, the formula may contain an extra percentage, a substitute index, or another element that changes how the RPI movement operates under the lease. Check the formula.
For this issue, HMRC ignores the RPI movement where the clause is RPI-only. You can then use the rent without treating that movement as a variable-rent feature.
Where the clause is RPI plus or minus something, HMRC says the adjustment must be taken into account in the net present value calculation.
- Keep the signed lease, not just the heads of terms.
- Check whether the review tracks RPI exactly.
- Read any cap and floor alongside the main rent-review wording.
- Check whether rent can only rise when RPI is positive.
- Look for a fixed addition or deduction, however small.
- Check the name of the index used in the clause.
This is where people get it wrong: a cap or a floor alone does not take an RPI clause outside HMRC’s stated approach. An extra 1%, however, does.
How to analyse it
Before entering figures into an SDLT calculation, first ask whether the clause adjusts rent solely by reference to RPI, taking account of every qualification contained in its wording. Read it closely.
- Identify each rent-review date in the lease.
- Find the index named in the clause.
- Check whether it is the retail prices index.
- Compare the formula with the published RPI movement.
- Identify any cap, minimum or increase-only condition.
- Identify any added or deducted percentage.
- Check how old the RPI figure is on the adjustment date.
- Decide whether the clause is RPI-only or contains another element.
Under the manual, HMRC accepts an earlier RPI reading where it was published up to three months before the adjustment, even though the legislation itself does not give that time period. The legislation does not specify it.
For a longer gap, the manual does not state that HMRC will accept it.
Example
Each June, Amir’s lease changes the annual rent of £100,000 by the percentage movement in RPI, so when RPI is 3%, the rent becomes £103,000 for that review. HMRC says that RPI adjustment is ignored for this SDLT issue.
Now change one detail. If the lease says “RPI plus 1%”, the rent becomes £104,000 instead. HMRC says this is not an adjustment solely in line with RPI, so the adjustment must be included when working out the net present value of the rent.
The result does not depend on the size of the extra 1%. It depends on the fact that the formula is no longer RPI alone.
Why this can be difficult in practice
Rent-review clauses can be long and may use defined terms found elsewhere in the lease. A clause may also include a fallback method if RPI is unavailable. Those details can matter.
You might assume that every inflation clause receives the same SDLT treatment. It does not. HMRC’s manual draws a line between RPI and a different index, even where both appear to measure inflation in a similar way.
- Calling a clause “RPI linked” does not settle what its formula does.
- RPIX is not RPI for this exception, in HMRC’s view.
- An added percentage prevents the clause being RPI-only.
- A delayed RPI figure may need checking against HMRC’s three-month position.
- A fallback formula may need separate consideration.
Key takeaways
- An RPI-only rent adjustment is ignored for this SDLT issue.
- HMRC says caps, floors and increase-only RPI clauses can still qualify.
- RPI plus, RPI minus and other indexes are treated differently.
Technical analysis
For advisers, and for anyone who wants to check the law behind this page. You do not need this section to understand the guidance above.
Legislation
- FA 2003 Schedule 17A para 7 — ignores rent adjustments in line with RPI
- FA 2003 Schedule 5 para 2 — uses net present value for lease rent
Official guidance
The pages below are HMRC’s guidance. Guidance is not law. It sets out how HMRC reads the legislation, and it is not binding on you, on a tribunal or on a court. Where guidance and the legislation differ, the legislation wins. HMRC can also change or withdraw guidance, and it may not cover your facts.
Where this is not settled
Explore this with an AI
Readers often want to test their own situation. Copy the prompt below into ChatGPT, Claude or Gemini. It hands the model the actual legislation for this page rather than letting it answer from memory, and tells it to be explicit about what is uncertain. What comes back is information, not advice – check it against the links above.
I am researching UK Stamp Duty Land Tax (SDLT), which applies in England and Northern Ireland. MY QUESTION RPI-linked rent and stamp duty on a lease [Replace this with your own situation: what you are buying, the price, the dates, who the buyer is, and what you plan to do with the property.] THE LAW THIS TURNS ON - FA 2003 Schedule 17A para 7 - ignores rent adjustments in line with RPI https://www.legislation.gov.uk/ukpga/2003/14/schedule/17A/paragraph/7/2025-11-17 - FA 2003 Schedule 5 para 2 - uses net present value for lease rent https://www.legislation.gov.uk/ukpga/2003/14/schedule/5/paragraph/2/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm13190 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. Guidance from HMRC is its view of the law, not the law, and does not bind a tribunal or a court. 2. Tell me what the rule actually requires, in plain English. 3. Tell me which facts decide the answer, and which facts would change it. 4. Tell me what evidence I would need to support the position. 5. Be explicit about anything unsettled or fact-sensitive. Do not guess. 6. Your training data has a cutoff and SDLT rates and reliefs change at fiscal events. Say so if you are not sure the law is current. POINTS ALREADY KNOWN TO BE UNCERTAIN ON THIS TOPIC - - Do not give me a conclusion you cannot support from the provisions above.
Legislation links show Finance Act 2003 as it stood on 2025-11-17. The law may have changed since, and the rules that apply are those in force on the date of your transaction. The official guidance this page is based on is here.
This page was last updated on 31 August 2026
Useful article? You may find it helpful to read the original guidance here: RPI-linked rent and stamp duty on a lease
Search Land Tax Advice with Google
