Long Read  

What is in Liz Truss's in tray?

Another option is to freeze energy bills, but how will that be funded? One option not on the table is a windfall tax on energy companies.

Coles warns of the risk of tax cuts doing more than offsetting rising prices for higher earners. She says: “While it would be a welcome boost for them, it could mean pushing prices up even further, which could leave us all worse off.”

So fulfilling Truss's promises will be an expensive endeavour for chancellor Kwarteng.

Shaun Moore, tax and financial planning expert at Quilter, says that while Kwarteng’s predecessor – Rishi Sunak – was keen to slow inflation, balance the books and limit borrowing by increasing taxes, Kwarteng has already faced some criticism for taking the borrowing approach.

Rachael Griffin, tax and financial planning expert at Quilter, explains that the marriage tax proposal would allow couples to pool their personal tax allowance – this is the amount a person can earn before starting to pay income tax, currently £12,570.

A fully transferable allowance would mean one spouse could earn up to £25,140 tax-free if the other is not earning due to caring responsibilities. 

Griffin says that although it is not an intrinsically bad idea, it fails to help the many families who have two working parents. Additionally, with a potential recession looming, it feels like an “odd” policy that might not encourage people into the workforce and therefore boost economic growth.

According to Jon Greer, head of retirement at Quilter, an area ripe for reform given the cost pressures people are facing is the money purchase annual allowance. 

At present, the threshold of £4,000 is simply too low as people who have rightly decided to continue to pay into their pension following accessing their funds get penalised.

Anti-recycling

Greer says the threshold should be moved to around £10,000 or scrapped altogether and replaced with anti-recycling rules. 

He adds: “Changing these rules could act as a lifeline for those struggling to pay their bills this winter who access their pension and are not then penalised for doing so when they resume contributions in the future.”

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, agrees that anti-recycling rules should be introduced to help those relying too heavily on their pensions.

She adds: “People who have had to raid their pension to make ends meet or are returning to work to boost their pension to cope with soaring bills face a pension headache. Under current rules if you have already accessed your defined contribution pension, you can’t contribute more than £4,000 a year.