Factors for Avoiding Special Annual Allowance Charge in Defined Benefit Pension Scheme

C

The special annual allowance charge is a tax charge that may be imposed on high earners who are members of a UK registered pension scheme and who exceed certain annual contribution limits. If Trevor were to exceed these limits, he could incur a tax charge.

Out of the options provided, option C is the most relevant factor that confirms Trevor will avoid incurring a special annual allowance charge in the current tax year. This is because the annual earnings limit for the standard annual allowance is currently set at £110,000. If Trevor's total annual earnings have never exceeded this amount, then he would not have exceeded the standard annual allowance limit and therefore would not be subject to the special annual allowance charge.

Option A is not relevant as Employer Financed Retirement Benefit Schemes (EFRBS) are generally not recognized as registered pension schemes and are not subject to the same tax rules as traditional pension schemes.

Option B, Trevor's age, is not a relevant factor in determining whether he will incur a special annual allowance charge.

Option D, the level of death benefit, is also not a relevant factor in determining whether Trevor will incur a special annual allowance charge. The special annual allowance charge is based on the amount of pension contributions made in a tax year, not on the type or level of benefits provided by the scheme.