The week unzipped: Air travel tax increase is just the beginning

HOLIDAYS will become more expensive from tomorrow following an increase in Air Passenger Duty which will push up the price of flights on a range of journeys.

The increase will see tax for short-haul flights of less than 2,000 miles in economy class rise from 10 to 11 and 20 to 22 for more expensive seats. For journeys between 2,001 miles and 4,000 miles, it climbs between 40 and 45 for economy and from 80 to 90 for travellers in premium seats.

The Association of Travel Agents has warned the new tax will push up the cost for a family of four visiting relatives in Australia by 340 in tax and an eyewatering 680 if they have paid for extra leg room in premium economy.

It further warned that this is just the start of the bad news, as the government has said it intends to double APD revenue by 2014 to 3.8 billion representing the largest stealth tax rise to hit the travelling public.

Elsewhere, travel insurers have warned that this cost may not be recoverable under the cancellation clause of most holiday policies, as technically the tax is not paid until the flight takes off.

However airlines typically levy an administration charge to cover it, which is deemed an irrecoverable cost by the insurers.

Fewer opt for pensions

The number of employees paying into company pension schemes fell by 300,000 last year, according to the Office for National Statistics, when a total of 8.7 million people contributed to a company pension.

The membership of public sector schemes remained at a steady 5.4 million. However, the number of workers contributing to private sector schemes fell to 3.3 million. Contributions to Personal Pensions (including Stakeholders) also fell by more than 1 billion in the tax year 2009/10 compared to the previous year, according to HMRC figures.

The lion's share of this drop is attributed to the 940 million fall in individuals' contributions to their schemes; employer contributions remained at almost the same level.

Price of gas going up

Scottish and Southern Energy is putting up its gas prices by 9.4 per cent from December.

The rise will affect 380,000 customers in Scotland and 3.6 million across the UK. Customers will see, typically, their monthly gas bills increase by around 5 a month.

The company blamed the hike on increasing wholesale cost of gas which it said had risen by 25 per cent since March.

Less contact on cards

MBNA, Europe's biggest credit card lender, is to roll out contactless payment technology for its UK customers within two years. The commitment means there will be more than five million MBNA-issued contactless credit cards by the end of 2011.

There are already around ten million contactless cards in the UK market. With the technology customers simply touch their card to payment terminals that display the contactless symbol. Cardholders need only occasionally enter their PIN.