Amendment of paragraph 1(8) of Schedule 35 to the Finance Act 2009

2.  In paragraph 1(8) of Schedule 35 to the Finance Act 2009 (pensions: special annual allowance charge), for “rate of 20%” substitute “appropriate rate” and insert at the end—

“For this purpose “the appropriate rate” is—

(a) 0% in relation to so much (if any) of the chargeable amount as, when added to the reduced net income amount, does not exceed the basic rate limit,

(b) 20% in relation to so much (if any) of the chargeable amount, as when so added, exceeds the basic rate limit but does not exceed the higher rate limit, and

(c) 30% in relation to so much (if any) of the chargeable amount as, when so added, exceeds the higher rate limit.

In this sub-paragraph—

“chargeable amount” means the amount in respect of which the special annual allowance charge is charged, and

“the reduced net income amount” means the amount after taking step 3 in section 23 of ITA 2007 in the case of the individual for the tax year.”.